Jeffrey Gundlach, who oversees more than $101 billion of assets as chief executive of DoubleLine Capital, has predicted a weaker dollar and more demand for inflation-protected securities now that U.S. President Donald Trump has "doubled down" on his stance regarding trade and securing jobs in America.
Trump's inaugural address "was a really isolationist speech," Gundlach said in a telephone interview late on Friday. "There was nothing conciliatory about it. You can see that Trump is unwavering from the themes he ran on."
The S&P 500 edged lower on Monday as Trump's protectionist stance sent investors scurrying for safe-haven assets.
This included an executive order formally withdrawing the United States from the 12-nation Trans-Pacific Partnership, negotiated by Trump's predecessor Barack Obama's administration but never approved by Congress.
In his inaugural address, Trump lamented that "for many decades, we've enriched foreign industry at the expense of American industry," and said it was time to put "America first."
He said every decision on trade, taxes, immigration and foreign affairs "will be made to benefit American workers and American families," and pledged broad infrastructure spending for such things as roads, bridges, airports and railways.
Gundlach said a weaker dollar adds to inflationary pressures and higher interest rates and will make U.S. exports more attractive in foreign markets, particularly as other currencies remain relatively strong.
With regard to Treasury inflation-protected securities, he said: "I am not taking profits because I think there is another leg up. There is a lot of demand and investors are committed to the idea that rates and inflation are rising."
Gundlach said he still holds gold, which was down for the second half of last year. He said "sell hubris, buy humiliation."
Gundlach, known on Wall Street as the Bond King, said about gold: "Assets that fall in price become unloved, humiliated. Assets that are up a lot in price have many supporters, even though the prices could be at a peak."
Gundlach maintained his preference for non-U.S. stocks over U.S. stocks, citing the latter's post-election rally. "It makes sense to start incrementally allocating out of the U.S. and into the non-U.S.," he said.
The DoubleLine Total Return Bond Fund posted a net outflow of $3.5 billion in December, its biggest one-month withdrawal ever. The fund, which launched in April 2010 and is DoubleLine's flagship, attracted a net $3.05 billion in new cash for all of 2016.