Federal Reserve

'Bond king' Jeffrey Gundlach: I think investors should be defensive

Gundlach: Investors should be in a defensive position
Gundlach: Investors should be in a defensive position

"Bond king" Jeffrey Gundlach told CNBC on Monday that investors should be defensive, especially in the midst of a "weak bond market" and a "broadly sideways" stock market.

"There seems to be sort of a battle royal going on with the market kind of dipping below 2,130 but unable to close below that level," the chief executive of DoubleLine Capital told CNBC's Scott Wapner on "Fast Money Halftime Report." "I would turn particularly negative if the S&P closed twice below 2,130."

Gundlach said he's been short on stocks all year and is "up tremendously" by avoiding or shorting certain consumer discretionary areas, such as rent, because of rising inflation.

When asked about Federal Reserve Vice Chairman Stanley Fischer's comments on the dangers of low rates, Gundlach said there is a lot of uncertainty, but he believes fiscal stimulus is coming.

Gundlach said Fed Chair Janet Yellen "moved the goal post" during her comments on Friday, with regards to the unemployment rate. Yellen suggested the Fed may want to run a "high-pressure economy," and keep interest rates lower.

"It seems to me that Janet Yellen doesn't really want to raise rates, at least not very much," he said.

Gundlach said he believes the days of negative interest rates are numbered, and steeper yield curves are in the future.

Regarding the upcoming presidential election, he said he does not believe the outcome to be particularly important in terms of the market.

"I think both candidates will be caught up in this trend of fiscal stimulus and supporting fiscal stimulus," he said. "I think we're headed to a fiscal stimulus regime, regardless of who wins."

DoubleLine Capital oversees about $100 billion in assets.