DoubleLine’s Jeffrey Gundlach called the Fed’s bluff late last month, telling investors during an interview that he suspected the central bank was merely “guessing” about the impact of inflation being “transitory”.
Since then, we have only received more signs that inflationary pressures are growing in the US economy, while a growing number of investors have been persuaded to agree with Gundlach.
The other day, DoubleLine released a recording of another talk given by Gundlach where he elaborated on the inflation theme, while also discussing other issues like the outlook for the US dollar in the face of President Biden’s tax-and-spend agenda.
During the course of an hour-plus conversation, much of it accompanied by a slide deck with some of Gundlach’s favorite charts, Gundlach tackled a few key topics that he feels could threaten the Fed’s ability to backstop financial markets.
He started by slamming Biden’s plan to hike capital gains taxes on taxpayers with more than $1 million in earnings, arguing that fears of higher capital gains taxes is already weighing in the market.
Gundlach argued that high-beta stocks and other speculative investments like bitcoin have the most to lose due to a hike in capital gains. After all, who is going to want to take a risk on a long shot if they need to give half of their winnings to the government?
“Today is an important day because the president has made good if you want to call it that on his promise to begin raising taxes and the capital gains tax if you make more than a million dollars a year in California the capital gains tax if the proposal goes through that was launched today will be 57 capital gains tax that’s the federal tax plus the California tax so it’s getting pretty ugly and i think it’s going to have some very significant effects which we started to see the minute that this tax proposal was was launched today we’ve seen bitcoin a very speculative darling investment these days go down about 20 from its high in the last couple of weeks and obviously a lot of people would think twice about speculating on something like bitcoin if they felt that if they won meaning the price went up from their cost that 57 percent of a highly speculative gamble if it hits if it hits would go to the federal government but the stock market also fell pretty sharply upon that no wonder it’s surprising that people haven’t been contemplating this already.”
He then launched into his criticism of the federal government’s embrace of an MMT-like monetary policy fusing fiscal spending and monetary stimulus to try and paper over the economic damage caused by COVID-19.- READ MORE
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