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Dow Melts Down As Gundlach Warns Bear Market Just Getting Started, As China Trade War Heats Up

Dow Melts Down As Gundlach Warns Bear Market Just Getting Started, As China Trade War Heats Up

Written by Ann Brown

May 13, 2019

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DoubleLine CEO Jeffrey Gundlach is interviewed during a taping of the “Wall Street Week” program on the Fox Business Network, in New York, Thursday, May 5, 2016. (AP Photo/Richard Drew)

Things are not looking too good on Wall Street. And Jeffrey Gundlach, chief investment officer of the $130-billion asset management group DoubleLine Capital, predicts with the trade war Trump has started with China, the market won’t improve anytime soon.

“China is imposing new retaliatory tariffs on $60 billion worth of U.S. goods, days after the Trump administration said it would impose higher tariffs on $200 billion in Chinese goods. The latest tit-for-tat exchange comes as trade talks have failed to yield a deal,” NPR reported.

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Wall Street has been negatively ever since Trump started talking tarrifs. The Dow and broader U.S. stock market crashed on May 7th, as investors were worried about Trump’s new tariff threat against China. In fact, Wall Street’s major indexes “suffered their worst single-day decline since January. After falling as much as 649 points, the Dow Jones Industrial Average closed down 473.39 points, or 1.8%, to 25,965.09,” Hacked reported.

Gundlach, whose known as the bond king, told CNBC, he thinks U.S. stocks are in a bear market because the NYSE composite index has fallen “over 20 percent and has failed to return to its high.”

He added that U.S. debt and deficit are “out of control” because they’re growing during a strong economy, without much little wiggle room, Bloomberg reported.

“People keep acting like this is some sort of locomotive that’s chugging along, but the New York Stock Exchange Composite Index — which to me is the most important one because it’s the biggest — it peaked in January of 2018 and then couldn’t quite make it back to that peak in October and now it couldn’t quite get back to that October level and now it’s rolling over again,” Gundlach said.

The current situation of Wall Street is part of a cycle he noted.

“A bear market is really more about cycles and manias and then things one by one rolling over and the market getting narrower and narrower, and I think all of that has been happening over about an 18-month time period,” Gundlach told CNBC. “I think that we’re in the late cycle … [and] to characterize the last 15 months as a bull market is just wrong.”

“A bear market is really more about cycles and manias and then things one by one rolling over and the market getting narrower and narrower, and I think all of that has been happening over about an 18-month time period,” Gundlach told CNBC. “I think that we’re in the late cycle … [and] to characterize the last 15 months as a bull market is just wrong.”

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