Jeffery Gundlach's 2018 Market Calls, One Year Later

John Gittelsohn, Bloomberg News

BC-Jeffery-Gundlach's-2018-Market-Calls-One-Year-Later , John Gittelsohn

(Bloomberg) -- Jeffrey Gundlach, DoubleLine Capital’s chief investment officer, hosts his annual “Just Markets” webcast after markets on Tuesday, offering his outlook for the year ahead.

Here’s what he said last year and what happened as of Dec. 31:

U.S. Equities

Call: Expect a run-up early in 2018, but an eventual reversal that would leave the market down for the year.
Outcome: The S&P 500 Index peaked on Sept. 20 and finished with a loss of 4.4 percent, including dividends.

Emerging-Market Equities

Call: Not a great time for traders to be buying, but long-term investors may benefit from attractive valuations relative to the U.S.
Outcome: The MSCI EM Index did worse than the S&P 500, dropping 14 percent on a total-return basis; price-earnings ratios still favor emerging markets.

European Equities

Call: A value trap.
Outcome: The Euro Stoxx 50 Index lost 16 percent after dividends in dollar terms.

Two-Year Treasuries

Call: Two-year notes could exceed 2.5 percent, but they’re “actually a pretty no-brainer investment” because they offer positive returns if held to maturity, when other assets may be reasonably priced.
Outcome: Yields stayed above 2.5 percent from June 11 to Dec. 28 and short-term bond funds generated positive returns.

10-Year Treasuries

Call: If rates on the 10-year surpass 3 percent, “then it’s truly, truly game over for the ancient bond bull market.”
Outcome: Rates closed above 3 percent on Sept. 18 and climbed to 3.24 percent Nov. 8, but then crept back down as investors seeking a haven pushed up bond prices.

Corporate Credit

Call: It’s a bad time to buy corporate bonds because “almost all the juice is out of the orange.”
Outcome: The Bloomberg Barclays US Corporate Bond Index lost 2.5 percent.

U.S. Dollar

Call: A short-term rally, but the big move will be to the downside.
Outcome: The dollar spot index hit a year-low on Feb. 15 before climbing to a 12-month high on Nov. 12. It’s still above the Jan. 9, 2018, level.

Bitcoin

Call: If you shorted the cryptocurrency on Dec. 13, 2017, you would end up in the money over the long term.
Outcome: It’s been mostly downhill since the Dec. 18, 2017, high of $18,674.

Commodities

Call: They’re at a point similar to the 1970s, when they were “a screaming buy.”
Outcome: The Bloomberg Commodity Index fell 13 percent.

Inflation

Call: Indicators such as the New York Fed Underlying Inflation Gauge suggest rising core inflation.
Outcome: Core inflation rose to 2.2 percent in November from 1.8 percent at the end of 2017.

U.S. Recession