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Jeffrey Gundlach believes Neel Kashkari will be next Fed chief because he's an 'easy money guy'

  • The the CEO of DoubleLine Capital said on Tuesday he believes Minneapolis Fed President Neel Kashkari will ultimately be President Donald Trump's pick for the next Fed chief.
  • "He happens to be the most easy money guy that's in the Federal Reserve system today."
  • Current Fed chief Janet Yellen's term expires in February and Gundlach believes Trump does not want her to continue.
  • An administration source told CNBC's Steve Liesman on Wednesday that Kashkari was not being considered for Fed chair. .

"Bond King" Jeffrey Gundlach has an unusual pick for who President Donald Trump will choose to be the next Federal Reserve chief.

"I actually have a very non-consensus point of view. I think it's going to be Neel Kashkari," the the CEO of DoubleLine Capital told the Vanity Fair New Establishment Summit on Tuesday in Los Angeles. "He happens to be the most easy money guy that's in the Federal Reserve system today and that's why he may win."

Kashkari is the president of the Minneapolis Fed and happened to say Monday that the central bank is making a mistake by continuing to raise rates, comments Gundlach referenced as helping him possibly get the job.

The term for current chair, Janet Yellen, expires in February. Wall Street believes there's still a chance Trump may pick her to continue and that she possibly would accept. Gundlach isn't buying that.

Neel Kashkari, president and chief executive officer of the Federal Reserve Bank of Minneapolis.
Andrew Harrer | Bloomberg | Getty Images
Neel Kashkari, president and chief executive officer of the Federal Reserve Bank of Minneapolis.

"I think there is no chance that she wants to be chairwoman, nor do I think the president wants her to be," said the manager of $109 billion.

Gundlach said that Trump needs someone who will keep rates low in order to keep his populist reputation and help his base voters and that's why he'll pick Kashkari.

"A stronger dollar is not good for achieving that agenda," he said.

Despite this enthusiastic endorsement from Gundlach, an administration source told CNBC's Steve Liesman on Wednesday that Kashkari was not being considered for Fed chair.

The current betting favorite on Wall Street for Fed chief is one-time Fed governor Kevin Warsh, but Gundlach says he doesn't believe it's going to be him. He also said there's no way the president's chief economic advisor Gary Cohn gets the job because of his close connections to Goldman Sachs, where he was the No. 2 executive. Last month, Trump interviewed them both for the job and current Fed governor Jerome Powell.

"I think I'm the only guy on God's green earth that believes it will be Neel Kashkari," said Gundlach.

The money manager believes next year will bring a tough time for "risk markets" like stocks as central banks around the world start to see the error of their ways in keeping rates so artificially low.

"I think we've been in an artificially inflated market," he told interviewer Bethany McLean, contributing editor of Vanity Fair. " We're looking at a much tougher environment as we move into 2018."

Surprisingly Gundlach doesn't really like bonds either.

But, he said, "I'm stuck with it."

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