Jeffrey Gundlach on the recession next year

Jeffrey Gundlach, a prominent bond investor, is the CEO of DoubleLine Capital ($ 130 billion) and sees a growing probability of recession in the next six to twelve months.

A few years ago, Gundlach said that he had begun to put forward key indicators of the recession in his webcasts, in order to see if there was potentially one on the horizon.

"For about a year and a half, he has always been:" No. No indication of a possible recession. "But, now, several indicators suggest that a recession could occur over the next year," Gundlach said. webcast Thursday.

Although it is not yet certain, the billionaire bond investor noted that the likelihood that the economy goes into the red had increased. He calculated that these chances were around 40 to 45% over the next six months and 65% the following year.

Most economists think the US economy is slowing, but few are expecting a recession, technically defined as two consecutive quarters of negative growth.

The main economic indicator of the US Conference Board, a key indicator followed by market observers, does not provide for it at this time.

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In the Gundlach charts, vertical areas shaded with red represent periods of recession, while the dark blue line is the main economic indicator of the Conference Board from one year to the next.

So far, the conditions for negative growth are not met, he said.

"You have never had a recession without the leading indicator touching 0 and going through it.This has not happened yet," Gundlach said.

"In fact, we have not even approached the zero yet," he said, adding that "2.7 is reading from one year to the next, except that our analysis suggests that it is possible that the leading indicator from one year to the next becomes negative before. end of the year. "

He pointed out that DoubleLine does not predict this movement accurately, but recognizes that it is a "possibility". So, let's watch this month by month. "

Race down in the United States and Europe

Gundlach then showed the evolution of economic data in the United States, in Europe and in the world, all things that he "notes that they decline quite regularly".

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The DoubleLine indicator compares the data they output day by day for each dataset to their 12-month moving average. This gives an idea of ​​the dynamics of the economy.

According to the table in DoubleLine's data, the global economy is showing results "below the steady trend for more than a year, which clearly shows no signs of good health," said Gundlach.

For the billionaire, the "most worrying" indicator is consumer expectations of the US Conference Board, less the current situation. This particular dataset compares current consumer views on the strength of the economy and their view of the future state of the economy.

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