WHEN: Today, Wednesday, September 17th
WHERE: CNBC's "Fast Money Halftime Report"
The following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with DoubleLine Capital Founder and CEO Jeffrey Gundlach and CNBC's Scott Wapner on CNBC's "Fast Money Halftime Report" (M-F 12PM – 1PM) today, Wednesday, September 17th. The following is a link to video from the interview on CNBC.com: https://www.cnbc.com/video/2019/09/18/doubleline-capital-ceo-jeffrey-gundlach-on-chances-of-a-recession.html.
All references must be sourced to CNBC.
Jeffrey Gundlach on the Fed Has an Easy Job:
Well, I think everybody knows they're going to cut rates by 25 basis points. It's pretty interesting that just a few weeks ago people were talking about a 50 basis point potential cut and even an intermediate cut. That was sort of in the wind there back at the end of August. But now, the bond market has really taken away the possibility of a 50 basis point cut, with the back up in rates that's happened globally of about 25 or 30 basis points over the last couple of weeks. So, the Fed has a pretty easy job this time.
Jeffrey Gundlach on the Fed Shouldn't Cut:
Actually, I don't think the Fed should cut actually. But they will. Because the bond market has given them the full green light and there's all of this kind of pressure for them to do it. I don't think the Fed should cut rates. I think what the Fed needs to do is let's step back a little bit. First of all, I think they need to develop more of a framework. It seems like every press conference that Jay Powell gives the message is very different from the one six weeks prior.
Jeffrey Gundlach on Recession Signals:
I think, you know, the economic data has gotten a little bit better. Yet, I still think when we put it all together, when we look at all of our indicators for recession, it seems that there is an increasing probability of recession before the 2020 election. Obviously, the yield curve being flat and even inverted from Fed funds, at least at this moment, out through the curve – you know, that's clearly something that's a precursor of potential recession.
Jeffrey Gundlach on Consumer Spending:
Consumer spending -- consumer attitudes and consumer spender are notorious for being very strong right at the last minute before a recession. It's the consumer ideas about how things are going that collapse last. So CEO confidence has started to deteriorate, with new orders really in a freefall. We've seen manufacturing not doing well.
Jeffrey Gundlach on Dots:
The real question is what's going to happen with the dots? I kind of think the Fed almost wishes they hadn't come up with these DOT things, because they've had a hard time predicting what their future path would be, pretty much for the past year. So, we'll see what happens with the dots. You'll might remember that at the June meeting, the idea was that they wouldn't be cutting rates here in 2019. But then just one meeting later, they had to cut them once and they had no cut for 19, but one cut for 2020. It will be interesting to see if they bring that cut in 2020 forward to 2019.
Jeffrey Gundlach on QE Light:
The Fed might have to start QE light as I call it. Meaning that they go back to expanding their balance sheet in line with the increase in currency to get the reserves – the free reserves in the system higher than what seems to be this toggle point of where it is right now at about a little under 1.4 trillion. They'll probably have to get that higher. It will be interesting to see if Jay Powell talks about in in the press conference. I think he has to.
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