WHEN: Today, Monday, November 24th
WHERE: CNBC's "Squawk Alley"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Doubleline Capital Founder & CEO Jeffrey Gundlach today, Monday, November 24th, on CNBC's "Squawk Alley" (M-F, 11AM-12PM ET). Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000331318, http://video.cnbc.com/gallery/?video=3000333232, http://video.cnbc.com/gallery/?video=3000333313 and http://video.cnbc.com/gallery/?video=3000333314.
All references must be sourced to CNBC.
KAYLA TAUSCHE: WELCOME BACK. IT IS THE FIRST TIME DOUBLELINE'S JEFFREY GUNDLACH IS ON THE RECORD AFTER THE DRAMATIC EXIT OF BILL GROSS FROM PIMCO. SARA EISEN IS IN LOS ANGELES WITH JEFFREY GUNDLACH HIMSELF, THE PROCLAIMED BY SOME IN THE MEDIA THE NEW BOND KING. SARA, I'LL SEND IT OVER TO YOU.
SARA EISEN: ALL RIGHT. THANKS VERY MUCH, KAYLA. AND WE ARE HERE ON DOUBLELINE'S TRADING FLOOR. JEFFREY, THANK YOU FOR HOSTING US HERE TODAY.
JEFFREY GUNDLACH: SURE.
EISEN: YOU'RE HAVING QUITE A MOMENT HERE. $2.6 BILLION OF IN FLOWS IN OCTOBER. THAT WAS A RECORD FOR YOU.
GUNDLACH: OKAY.
EISEN: MONEY COMING IN FROM PIMCO INVESTORS?
GUNDLACH: PROBABLY, AMONG OTHERS. BUT YEAH, SURE.
EISEN: HOW HAS THAT IMPACTED YOU? WE HAVEN'T REALLY HEARD FROM YOU SINCE THE DEPARTURE OF BILL GROSS IN A VERY DRAMATIC FASHION. WHAT ARE YOU SEEING IN TERMS OF CLIENTS?
GUNDLACH: WELL, WHAT HAPPENS IS, WHEN THERE'S A BIG ORGANIZATIONAL CHANGE, A LOT OF SEASONED ADVISORS KNOW THAT THEY'VE SEEN THIS MOVIE BEFORE AND PULL THEIR MONEY THE FIRST DAY. SO YOU SAW A LOT OF MONEY GOING TO MONEY MARKET FUNDS AND GOING TO INDEX FUNDS, WHICH IS UNDERSTANDABLE. PEOPLE AT FIRST FLEE FROM THE ORGANIZATIONAL CHANGE. THEY DON'T KNOW WHERE THEY'RE FLEEING TO UNTIL DOWN THE ROAD. SO I THINK A LOT OF MONEY IS STILL IN MOTION. NOT SO MUCH IN THE MUTUAL FUND INDUSTRY BECAUSE I THINK A LOT OF THAT HAPPENED IN THE FIRST FEW WEEKS, BUT INSTITUTIONALLY THERE'S A LOT OF THINGS GOING ON WITH INVESTORS THAT MOVE MORE SLOWLY THAN JUST SELF-DIRECTED MONEY THAT ARE MAKING CHANGES BECAUSE OF THE ORGANIZATIONAL SWITCH THERE.
EISEN: YOU FAMOUSLY HAD THAT MEETING WITH BILL GROSS ABOUT POSSIBLY JOINING YOU AT DOUBLELINE. ARE YOU GLAD THAT HE'S NOT HERE?
GUNDLACH: YOU KNOW, MIXED FEELINGS. IT WAS SORT OF A 50/50 KIND OF PROPOSITION IN TERMS OF MY INTEREST. THERE WAS A LOT OF POSITIVES AND MAYBE A LOT OF NEGATIVES. I MEAN, I'LL SAY ONE THING OUR INVESTORS ARE HAPPY THAT THAT DIDN'T HAPPEN BECAUSE THEY INVESTED IN SOMETHING THAT THEY THOUGHT THEY KNEW WHAT IT WAS AND THEY'VE BEEN HAPPY WITH IT AND IT'S BEEN SUCCESSFUL AND IF YOU MAKE A MAJOR ORGANIZATIONAL CHANGE LIKE BRINGING IN SOMEBODY WITH THAT KIND OF POWER AND PERSONALITY, IT'S UNDERSTANDABLE THAT INVESTORS WOULD ASK, "WHAT EXACTLY DOES THIS MEAN?" AND THE ONLY HONEST ANSWER WOULD BE, "I DON'T KNOW. WE'LL HOPE FOR THE BEST, BUT WE DON'T KNOW." SO WE WOULDN'T HAVE KNOWN WHAT WOULD HAVE HAPPENED. I WOULD LIKE TO THINK IT WOULD HAVE BEEN SUCCESSFUL, BUT IT'S JUST AS WELL BECAUSE AS I SAID AT THE TIME DOUBLELINE DOESN'T NEED A MAKE-OVER. WE'RE A MATURE COMPANY, PERFORMING VERY WELL, OPERATING LIKE A WELL-OILED MACHINE. SO GLUE IN THE GEARS PROBABLY NOT A POSITIVE.
EISEN: YEAH, I DO WANT TO TALK ABOUT THE PERFORMANCE IN A MINUTE AND SOME OF YOUR CALLS. BUT JUST ON THIS BILL GROSS IDEA, PEOPLE ARE CROWNING YOU THE NEW BOND KING. THERE IS AN ARTICLE IN FORBES, GLORY TO THE NEW BOND KING. IS THAT A TITLE YOU'RE HAPPY TO ACCEPT?
GUNDLACH: I NEVER REALLY GO, YOU KNOW, TRY TO COURT THAT KIND OF A THING. THAT'S SOMETHING THAT I THINK CAME OUT BECAUSE OF THE COVER OF BARRONS BACK IN 2011 WHERE THEY SAID THE NEW BOND KING. I WAS SURPRISED BY THAT HEADLINE, FRANKLY, BECAUSE THE KIND OF
EISEN: WELL, WITH THE SPECTACULAR DOWNFALL OF BILL GROSS I THINK THAT SUPER CHARGED IT.
GUNDLACH: YEAH. HOW COME NO ONE SAYS WHO THE STOCK KING IS? HOW COME NOBODY SAYS WHO THE POTATO CHIP KING IS?
EISEN: THE BOND WORLD, IT'S SO MUCH BIGGER AND IN WAYS IT'S HARDER TO MASTER. I MEAN YOU KNOW THAT. YOU HAD A FLAT YEAR IN 2013. THIS YEAR IS A LITTLE BIT BETTER.
GUNDLACH: WELL, WE OUTPERFORMED BY A LOT IN 2013 ACTUALLY. THE MARKET WAS DOWN 2% AND WE WERE SLIGHTLY POSITIVE. SO IT'S ACTUALLY QUITE A STRONG PERFORMANCE HERE RELATIVE TO A BENCHMARK. BUT YEAH, I MEAN, BOND YIELDS WENT UP IN 2013. SO A LOT OF INVESTORS WERE NEGATIVE. FORTUNATELY, WE WEREN'T. BUT IT WASN'T A HUGE POSITIVE RETURN BECAUSE OF THE RISING INTEREST RATES.
EISEN: LET'S TALK ABOUT THAT CALL BECAUSE THAT WAS A GOOD ONE. 2014, ALL OF WALL STREET. I MEAN, THE CONSENSUS VIEW WAS THAT YIELDS HAD TO GO UP, TREASURIES WERE OVERVALUED, YOU SAID THE OPPOSITE. AND IT TURNED OUT TO BE RIGHT.
GUNDLACH: YEAH. WELL, TREASURIES BEING OVERVALUED WAS A STRANGE OPINION TO HAVE ENTERING 2014. YOU MIGHT NOT HAVE THOUGHT THEY WERE WILDLY ATTRACTIVE BUT THEY CERTAINLY WEREN'T OVERVALUED. IN FACT, ON OUR WORK ENTERING 2014 THE TREASURIES WERE THE CHEAPEST SECTOR OF THE BOND MARKET. AND IN FACT, TODAY TREASURES ARE STILL SLIGHTLY CHEAP.
EISEN: TREASURIES ARE CHEAP?
GUNDLACH: VERSUS MANY BOND SECTORS, YES.
EISEN: YEAH, VERSUS SPAIN, PERHAPS. OR GERMANY.
GUNDLACH: NO VERSUS CORPORATE BONDS, VERSUS MUNICIPAL BONDS, TREASURIES ARE CHEAP. ACTUALLY, USING CERTAIN HISTORICAL ANALYSIS. THEY'RE LESS CHEAP THAN THEY WERE, THOUGH. ENTERING 2014 EVERYBODY – YOU'RE RIGHT – EVERYBODY WAS NEGATIVE. 68 OUT OF 68 ECONOMISTS SAID RATES WOULD RISE. EVERYBODY WAS BEARISH. IT WAS LIKE A 97% ON A DAILY SENTIMENT SURVEY BEARISH. AND YET, THERE WERE ALL KINDS OF REASONS TO LIKE TREASURIES, INTERESTINGLY. THEY WERE CHEAP VERSUS OTHER BOND SECTORS, THE RELATIVE VALUE VERSUS EUROPE AND JAPAN.
EISEN: SO DOES THAT CARRY OVER INTO 2015 ALL OF THESE REASONS TO LIKE TREASURIES?
GUNDLACH: THEY'RE LESS COMPELLING, BUT THE REASONS ARE STILL I THINK FAIRLY STRONG, PARTICULARLY THE RELATIVE VALUE ARGUMENT. I MEAN, TODAY FOR THE FIRST TIME I THINK EVER, SPANISH TEN-YEAR BOND YIELDS ARE BELOW 2%. IT SEEMS TO ME ALMOST UNTHINKABLE THAT U.S. INTEREST RATES COULD RISE IN ANY MEANINGFUL WAY AGAINST A BACKDROP OF SPANISH BOND YIELDS BEING LESS THAN 2%. OF COURSE FRENCH BOND YIELDS BEING CLOSE TO 1%.
EISEN: I THINK IRELAND IS AT 1.5 OR SOMETHING.
GUNDLACH: YEAH. ITALY AT 2.17. I MEAN, TREASURY BOND YIELDS ARE ACTUALLY REASONABLY ATTRACTIVE. IT'S A SAD STATEMENT, RIGHT?
EISEN: SO WHAT DO WE SEE FOR THE TEN-YEAR NEXT YEAR? WE SEE THIS RANGE? WE ARE AT, WHAT? 230 NOW?
GUNDLACH: WELL, IT'S BEEN –THE LINE IN THE SAND FOR ME HAS BEEN 220 ON THE TEN-YEAR. YOU'LL REMEMBER THAT IN THE MIDDLE OF OCTOBER, THE TEN-YEAR BREACHED 220 IN THAT WILD DAY WHEN THE STOCK MARKET WAS DOWN 460 POINTS AND THEN ENDED UP REBOUNDING –
EISEN: YEAH. THAT WAS THE LOW.
GUNDLACH: AND THE TEN-YEAR TREASURIES TOOK OFF LIKE A SCOLDED DOG ONCE IT BREACHED 220. IT WENT DOWN TO 186. WHAT'S INTERESTING NOW WE'RE BACK ABOVE 220, IN FACT YOU WERE ALMOST THE NEXT DAY. SO 220 BASICALLY HELD IN A CERTAIN SENSE EXCEPT FOR THE POOR PERSON WHO ENDED UP COVERING THEIR SHORT WHICH IS WHAT MUST HAVE HAPPENED, TO GET THE TEN-YEAR DOWN TO 186. BUT I THINK WHAT'S REMARKABLE IS THE LACK OF PROGRESS FOR THE TEN-YEAR TO EVER GO HIGHER IN YIELD. THAT'S THE STORY OF 2014. NOT JUST THAT RATES FELL AGAINST A CONSENSUS VIEWPOINT OF THE OPPOSITE, ENTERING THE YEAR. BUT WHAT'S BEEN FASCINATING IS HOW THE TEN-YEAR AND 30-YEAR BOND YIELD HAVE ALMOST NEVER GONE UP AT ANY TIME EVEN LOCALLY FOR A SHORT WHILE THIS YEAR. YOU THINK ABOUT 2011 WHEN THE TEN-YEAR TREASURY DROPPED 200 BASIS POINTS FROM 375 TO 175. ALONG THE WAY, IT HAD SETBACKS. IT WENT UP 70, 80 BASIS POINTS. IT GOES DOWN IRREGULARLY, USUALLY, THE BOND YIELD. THIS YEAR THERE IS NO SETBACK. IT IS LIKE PEOPLE WAITING TO SHORT THE BOND MARKET OR WAITING TO WAIT FOR A DIP TO BUY THE BOND MARKET HAVE BEEN COMPLETELY FRUSTRATED.
EISEN: SO DOES THE FED –
GUNDLACH: AND BOND YIELDS ARE GOING TO DROP I THINK BECAUSE IF THEY CAN'T GO UP, THEN THEY HAVE TO GO DOWN.
EISEN: DOES THE FED GIVE A REASON TO GO THE OPPOSITE WAY? I MEAN, DO YOU EXPECT A FED RATE INCREASE NEXT YEAR?
GUNDLACH: I THINK THE FED WILL PROBABLY RAISE RATES NEXT YEAR, NOT FOR FUNDAMENTAL REASONS. BECAUSE THE FUNDAMENTAL REASONS FOR RAISING RATES ARE COMPLETELY ABSENT, PARTICULARLY THE INFLATION ARGUMENT WHICH HAS BECOME COMPETELY DEBUNKED. I MEAN COMMODITY PRICES ARE THE SAME AS THEY WERE IN 2010. THEY WERE UP IN THE FIRST QUARTER, THERE WAS A LITTLE BIT OF INFLATION ARGUMENT YOU COULD HAVE MADE BACK IN MARCH. IT'S GONE. I MEAN, WE'VE HAD FOUR MONTHS IN A ROW OF CPI BEING ZERO, AND IF OIL IS GOING TO STAY IN THE MID 70s OR GO LOWER, WHICH IS POSSIBLE, WE'RE PROBABLY GOING TO SEE A YEAR OVER YEAR CPI OF ZERO. SO THE FED SHOULD NOT BE RAISING INTEREST RATES AND YET THEY DON'T WANT TO BE AT ZERO. THEY'RE IN A CONUNDRUM. THEY DON'T HAVE A REASON TO RAISE RATES.
EISEN: AND THAT WILL FORCE THEM TO DO IT?
GUNDLACH: THEY MIGHT RAISE RATES JUST TO SEE WHAT HAPPENS.
EISEN: WHAT HAPPENS TO THE DOLLAR THEN? I KNOW YOU HAVE HAD THIS STRONG DOLLAR CALL. EVERYONE IS ON THIS TRADE.
GUNDLACH: YEAH IT IS VERY CROWDED.
EISEN: ARE YOU WORRIED IT'S GETTING A LITTLE CROWDED?
GUNDLACH: SOMETIMES THE CONSENSUS IS RIGHT AND CURRENCY TRENDS ARE INCREDIBLY POWERFUL AND LONG LIVED. SO I THINK ON A SHORT-TERM BASIS ANYTHING CAN HAPPEN. BUT THE DOLLAR WILL PROBABLY APPRECIATE, PARTICULARLY IF THE FED RAISES INTEREST RATES.
EISEN: MORE AGAINST THE EURO OR THE YEN WHO ARE BOTH ON EASY STREET?
GUNDLACH: THE YEN HAS BEEN WEAKER THAN THE EURO VERSUS THE DOLLAR AND I THINK THERE IS EVERY REASON TO BELIEVE IT WILL CONTINUE TO BE AMONG THE WEAKER CURRENCIES. AGAIN A CROWDED TRADE, RIGHT? THE YEN HAS BEEN – SHORT THE YEN HAS BEEN A VERY POPULAR TRADE. BUT GUESS WHAT? IT'S BEEN RIGHT.
EISEN: IT'S WORKED.
GUNDLACH: IT'S BEEN RIGHT. AND IN FACT, YOU NEVER REALLY FELT ANY PAIN.
EISEN: CORRECT.
GUNDLACH: IT WENT FROM 80 TO 102, THEN SAT THERE IN KIND OF A MIND NUMBING WAY FOR SO MANY MONTHS. I MEAN, YOU'D SWEAR IT WAS BEING MANIPULATED. THE NEXT THING YOU KNOW, IT WEAKENS UP AGAIN AND BOOM IT'S AT 118. I MEAN, EVERYONE THINKS THE YEN IS GOING TO 125, 140, I DO TOO. IN FACT, I SAID TWO YEARS AGO THE YEN WILL ULTIMATELY FIND ITS WAY TO 200.
EISEN: YEAH, YOU TOLD US A FEW MONTHS AGO.
GUNDLACH: YEAH. NOT THIS WEEK BUT I THINK IT WILL ULTIMATELY GET TO 200.
EISEN: WE'VE GOT TO TAKE A QUICK BREAK. JEFFREY. WE ARE HERE AT THE DOUBLELINE TRADING FLOOR AND WE ARE GOING TO COME BACK AND TALK TO JEFFREY GUNDLACH ABOUT SOME OF HIS OTHER FAMOUS CALLS, INCLUDING EQUITIES. SOME OF THEM HAVE BEEN NOT SO HOT INCLUDING APPLE. THE STOCKS WE TALK ABOUT HERE REGULARLY ON "SQUAWK ALLEY," WE'LL HAVE TO ASK HIM ABOUT ALIBABA AS WELL AND THAT MASSIVE BOND SALE WHEN "SQUAWK ALLEY" RETURNS ON CNBC.
SCOTT WAPNER: COMING UP AT THE TOP OF THE HOUR, WHILE MANY STRATEGISTS ARE MORE CAUTIOUS FOR 2015, OPPENHEIMER'S JOHN STOLTZFUS IS RAISING HIS TARGET FOR STOCKS AND HE WILL TELL YOU WHY HE'S BUCKING THAT TREND. PLUS, GEMMA GODFREY ON WHY SHE'S ADDING RISK NO MATTER WHAT MARIO DRAGHI DOES NEXT. AND A BIG CALL ON BIG OIL. DOES IT MARK THE BOTTOM FOR CRUDE? NOW BACK TO L.A. AND SARA EISEN AND MY PAL JEFFREY GUNDLACH.
EISEN: ALRIGHT, THANKS VERY MUCH, SCOTT WAPNER. HERE IN L.A. ON THE TRADING FLOOR OF DOUBLELINE WITH JEFFREY GUNDLACH. BEING CROWNED THE NEW BOND KING. I DO WANT TO TALK ABOUT STOCKS WITH YOU. SCOTT JUST MENTIONED OIL. YOU THINK OIL PRICES ARE GOING EVEN LOWER?
GUNDLACH: YEAH. I THINK OIL PRICES WILL GO LOWER. I THINK WE'RE IN THE SECOND PART OF THE CYCLE WHERE FIRST PRICES DROP FOR MAYBE ECONOMIC REASONS OR GLOBAL ACTIVITY REASONS, BUT NOW THE PRODUCERS OF OIL ARE REALLY GETTING SQUEEZED. MANY COUNTRIES NEED HIGHER OIL PRICES TO SAY BALANCE THEIR BUDGETS. IRAN, FOR EXAMPLE, NEEDS OIL AT 130 PLUS TO BALANCE –
EISEN: WELL, THAT'S WHY EVERYONE IS LOOKING AT OPEC THIS WEEK.
GUNDLACH: RIGHT. BUT YOU'RE AT THE STAGE WHERE WITH OIL PRICES NOW HAVING SORT OF SETTLED IN BELOW 80, THAT A LOT OF COUNTRIES WILL PROBABLY START INCREASING THEIR PRODUCTION, MAYBE ON THE SLY, AGAINST WHAT THEY'RE SUPPOSED TO BE DOING OR WHAT THEY SAY THEY ARE DOING, BUT I THINK PRODUCTION MIGHT BE RAMPED UP BECAUSE COUNTRIES THAT NEED REVENUE FROM OIL, WELL, YOU KNOW, THE PRICE ISN'T WHAT IT USED TO BE, SO IT'S PRICE TIMES VOLUME EQUALS REVENUE. SO WITH THE PRICE DOWN, THEIR VOLUME MAY GO UP WHICH COULD CREATE SORT OF A VICIOUS CYCLE ABOUT OIL PRICES GOING LOWER. SO REALLY, OIL –
EISEN: WTI. WHAT LEVELS ARE YOU THINKING?
GUNDLACH: WELL, I THINK IT'S GOING TO GO TO 70. THAT'S REALLY LIKE I SAID, 220 IS SORT OF THE LINE IN THE SAND ON THE TEN YEAR. I THINK 70 IS THE LINE IN THE SAND ON OIL. I THINK IF IT DROPS BELOW 70 AND I'M NOT REALLY – I DON'T REALLY HAVE A VIEW WHETHER IT WILL OR WON'T. BUT IF IT DOES, I THINK IT'S GOING TO DROP PRETTY QUICKLY A LOT LOWER BECAUSE OF THE SECOND PART OF THE CYCLE WITH COUNTRIES PUMPING A LOT. SO ONE THING THAT'S INTERESTING WHEN I STARTED IN THIS BUSINESS 30 YEARS AGO, EVERYONE WAS FIXATED ON OIL. BECAUSE THEY REMEMBER THE 70s AND HOW THAT FUELED SO MUCH INFLATIONARY PROBLEMS. OIL IS STILL A FANTASTIC INDICATOR OF THE CPI. IT'S VERY HIGHLY CORRELATED. AND IF OIL STAYS AROUND $75 A BARREL, WHICH I THINK IT WILL.
EISEN: DEFLATION?
GUNDLACH: IT MEANS THAT THE CPI SHOULD PROBABLY GO TO ZERO. YEAR OVER YEAR. ZERO. SO CERTAINLY NOT INFLATION. SO AGAIN, THERE'S NO REAL REASON WHY BOND YIELDS ARE SUPPOSED TO RISE AND THEY DON'T BECAUSE THE INFLATION PICTURE HAS DEFINITELY SHIFTED TOWARDS ONE OF FEARS MORE OF DEFLATION THAN INFLATION. IT'S FASCINATING AGAIN, WHEN I STARTED IN THIS BUSINESS, EVERYONE WAS FIXATED ON LET'S GET RID OF INFLATION. INFLATION IS THE ENEMY. NOW YOU HEAR JAPAN –
EISEN: THEY WANT IT.
GUNDLACH: AND EUROPEAN PEOPLE LIKE MR. DRAGHI SAYING, THERE'S A DARK CLOUD OVER OUR ECONOMY. THE DARK CLOUD IS WE CAN'T GET INFLATION TO ACCELERATE LIKE IT'S SUPPOSED TO AT THIS PART OF AN ECONOMIC CYCLE. SO INTERESTINGLY, NOW INFLATION IS VIEWED AS THE FRIEND AND DEFLATION AS THE ENEMY. I'VE BEEN SAYING FOR YEARS THAT THE UNITED STATES WILL ULTIMATELY HAVE INFLATION. BUT I THINK IT WON'T HAPPEN UNTIL PEOPLE WANT IT. THEY ACTUALLY WANT INFLATION. BECAUSE INDEBTED SOCIETIES AND INDEBTED DEVELOPED ECONOMIES NEED SOME AMOUNT OF INFLATION TO HELP DEVALUE ALL OF THEIR DEBTS. IT'S A REALLY TERRIBLE SITUATION AS U.S. HOMEOWNERS FOUND OUT IN 2008, 2009, WHEN YOU ARE IN DEBT AND YOUR ASSETS ARE DEPRECIATING.
EISEN: I WANT TO TALK ABOUT SOME OF YOUR STOCKS VIEWS AS WELL AS THE BIG PICTURE THOUGHTS. APPLE RIGHT NOW ON ITS WAY TO A TRILLION DOLLAR COMPANY, ABOUT $700 BILLION IN MARKET CAP RIGHT NOW. A FEW MONTHS AGO YOU TOLD US IT WAS A SELL.
GUNDLACH: YEAH. WELL I BOUGHT APPLE AT 405, SO SELLING IT AT – WELL, THAT'S BEFORE THE REVERSE SPLIT. SO YOU HAVE TO ADJUST IT.
EISEN: SURE.
GUNDLACH: SO SELLING AROUND 700 ISN'T EXACTLY A ROAD MAP TO THE POOR HOUSE. BUT I THINK WHAT'S HAPPENED TO APPLE IS THIS APPLE PAY THING SEEMS TO BE POTENTIALLY A BIG DEAL AND SO IT'S SORT OF FIRED A RETRO ROCKET I THINK UNDERNEATH THE POTENTIAL FOR THE –
EISEN: SO WOULD YOU BE A BUYER?
GUNDLACH: I DON'T LIKE BUYING THINGS WHEN THEY ARE AT AN ALL-TIME HIGH. I'M A BUY LOW PERSON. SO I'M NOT REALLY A BUYER OF THINGS WHEN THEY ARE PUSHING AT NEW HIGHS. BUT I THINK APPLE HAS REALLY, LIKE I SAID, FIRED A RETRO ROCKET UNDERNEATH THEIR ECONOMIC PROSPECTS. SO IT'S PROBABLY GOING TO BE A MARKET LEADER AS OPPOSED TO A MARKET LAGGER.
EISEN: ARE ANY OF THE – YOU KNOW, YOU HAVE TALKED A LOT ABOUT SOME OF THOSE HEADLINE GRABBING TECHNOLOGY STOCKS BEFORE. TESLA, AMAZON. YOU HAVE BEEN MYSTIFIED BY VALUATIONS I THINK ON BOTH. ARE ANY OF THEM PIQUING YOUR INTEREST?
GUNDLACH: WELL ACTUALLY, I SPOKE AT A THING BACK IN MAY WHERE TESLA WAS AT 200 AND I SAID I ACTUALLY HAVE RELIGION. I LIKE TESLA. TESLA – IT'S THE BATTERIES. IT IS ALL ABOUT THE BATTERIES. I THINK THEY COULD ULTIMATELY ALMOST CHANGE SOCIETY IF THEY PURSUE BATTERY TECHNOLOGY THAT REALLY CREATES THE ABILITY TO STORE ENOUGH ENERGY THAT YOU CAN SAY RUN A HOUSE ON, GET YOURSELF OFF THE GRID, PARTICULARLY IN THE SUN STATES LIKE HERE IN SOUTHERN CALIFORNIA. YOU PUT SOLAR COULD REALLY TAKE OVER. SO I THINK TESLA IS AN INTERESTING COMPANY, NOT FOR THE CARS. IN FACT –
EISEN: WHAT ABOUT THE STOCK? YOU SAID YOU BUY LOW. IT IS ALMOST, WHAT? A $30 BILLION COMPANY NOW?
GUNDLACH: YEAH, I LIKED IT AT 200. NOW IT'S HIGHER THAN THAT. AND IT HAS BEEN FLOPPING AROUND A LOT. BUT I THINK TESLA REALLY HAS AN ABILITY TO BE A MAJOR, MAJOR DEAL. SO IT'S RISKY. BECAUSE YOU'RE RIGHT, IT'S AT A HIGH VALUATION. BUT I LIKE IT. AND SO I LIKE THAT ONE. AND AMAZON I'VE BEEN MYSTIFIED FOREVER. I REMEMBER BACK A YEAR AGO GOING TO MY EQUITY GUYS AND SAYING I DON'T GET THIS AMAZON THING. THEY NEVER MAKE ANY MONEY, YOU KNOW?
EISEN: IT'S ABOUT THE LONG TERM.
GUNDLACH: YEAH AND THEY SAY AND ONE OF MY GUYS SAID, "I LOVE THAT STOCK. IT IS MY FAVORITE STOCK IN THE WORLD." AND I SAID, "BUT THEY NEVER MAKE ANY MONEY." HE SAYS, "OH BUT WAIT. JUST WAIT. THEY KEEP REINVESTING." BUT NOW THE MARKET HAS SORT OF GIVEN UP ON AMAZON. I THINK THAT MY POINT OF VIEW HAS BECOME SOMEWHAT EMBRACED BY THE MARKET, THAT, YOU KNOW, IT'S SORT OF SHOW ME. YOU KNOW? PEOPLE FROM MISSOURI NOW ON AMAZON AS OPPOSED TO SAYING, "OKAY IT'S GOING TO HAPPEN." WELL, IT'S BEEN 17, 18 YEARS, RIGHT? AT SOME POINT YOU HAVE TO PRODUCE. SO I THINK THEY'RE GOING TO NEED TO SHOW SOME PROFITS FOR THAT STOCK TO GET BACK ON THE UP SIDE.
EISEN: WHILE YOU'RE THINKING ABOUT GAME CHANGING KIND OF COMPANIES AND TECHNOLOGIES, WHAT ABOUT ALIBABA?
GUNDLACH: ALIBABA IS PROBABLY THE, YOU KNOW, THE BEST COMPANY IN CHINA. OBVIOUSLY, THEY HAVE BEEN WELL EMBRACED. I DON'T KNOW AN AWFUL LOT ABOUT IT FRANKLY, BUT APPARENTLY THEY HAVE THE ABILITY TO BE PERHAPS THE LARGEST COMPANY IN THE WORLD.
EISEN: WOULD YOU BE A BUYER IF YOU LEARNED MORE ABOUT IT?
GUNDLACH: I REALLY DON'T HAVE AN OPINION ON ALIBABA.
EISEN: BUT YOU LIKE CHINESE STOCKS, I KNOW. RIGHT?
GUNDLACH: I KIND OF DO. JUST ON THE MARKET ACTION. IT IS REALLY INTERESTING. THE CHINESE MARKET WAS THE WEAKEST MARKET JUST ABOUT IN THE WORLD FOR A FEW YEARS UNTIL RECENTLY. AND YET THE CHINESE ECONOMY HAS BECOME SORT OF NOTICEABLY WEAKER. IF YOU SEE, THE CHINESE ARE EVEN EASING. SO IT IS STRANGE THAT AS THE CHINESE ECONOMY HAS GOTTEN WEAKER, ALL OF A SUDDEN THE STOCKS HAVE STARTED TO GET STRONGER, BUT THEY DO APPEAR ON A CHART BASIS TO HAVE PUT IN A BASE AND THEY'VE BEEN PERSISTENTLY STRONG EVER SINCE THEY BROKE OUT ABOVE THAT 2100 LEVEL. SO THE CHINESE MARKET IS STRANGE, BUT IT SEEMS TO BE SOMETHING THAT IS A LEADING MARKER AS OPPOSED TO A LAGGARD.
EISEN: OK. FINAL QUESTION, JEFFREY. WE'VE GONE THROUGH A LOT OF DIFFERENT ASSETS AND COUNTRIES AND THEMES. WE NEED TO MAKE A HEADLINE HERE. WHAT IS GOING TO BE THE BIGGEST CALL OF 2015 THAT YOU HAVE? THE BIGGEST TRADE ON? QUICKLY.
GUNDLACH: WELL, I'VE GOT TO COME UP WITH IT FIRST. BUT, IT'S NOT YEAR END YET.
EISEN: ISN'T THAT WHAT YOU DO HERE?
GUNDLACH: YOU KNOW, I THINK THAT THE SURPRISE WILL BE, AND I DON'T KNOW IF IT'S 2015 OR 2016, I THINK THE SURPRISE WILL BE HOW LOW A LEVEL THE U.S. YIELD CURVE FLATTENS AT. I THINK THE FED IS GOING TO RAISE RATES. THE MESSAGE OF 2014 HAS BEEN, AS THE POTENTIAL FOR FED RATE HIKES HAS INCREASED, THE LONG END HAS DONE NOTHING BUT RALLY. I THINK THE YIELD CURVE IS GOING TO FLATTEN AT A LEVEL PREVIOUSLY THOUGHT UNTHINKABLE.
EISEN: PREVIOUSLY THOUGHT UNTHINKABLE. WE'LL LEAVE IT THERE. THAT IS VERY JEFFREY GUNDLACH. THANK YOU FOR SPENDING SO MUCH TIME AND HAVING US HERE AT YOUR OFFICE ON THE TRADING FLOOR.
GUNDLACH: THANKS FOR COMING IN.
EISEN: I'LL SEND IT BACK TO YOU GUY IN NEW YORK FOR "SQUAWK ALLEY."
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