US Predicted to Fall into Recession!
The United States (US) is predicted to experience an economic recession, as early as this year. This condition is caused by high interest rates which put pressure on consumers and companies in the US.
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Gundlach said that one of the signs of problems in Uncle Sam's economy is the increasing number of people who are in arrears on their credit cards. Apart from that, retail sales data which appears to be getting weaker indicates the possibility of an economic contraction occurring faster than the risk of an inflation rebound.
"There are many signals (the US will enter the brink of) recession out there. There are more signs of recession than inflation," said Chief Executive of DoubleLine Capital Investment Management, Jeffrey Gundlach while speaking at a webinar.
Gundlach also predicts that many private companies will experience debt default. Therefore, he advised the public to avoid buying bonds or credit investments in companies with a triple-C rating.
Specifically regarding private credit, he said that investors seeking higher returns in private markets compared to public debt markets face the risk of being trapped in illiquid assets in the event of a sharp economic slowdown.
"There are no factors that make private credit look better than public credit at this point. It's riskier, it doesn't provide the same rewards, it's the worst," explains Gundlach.
On the other hand, he said that currently the level of US government debt is very large and raises concerns about the soaring interest payments on government debt caused by rising interest rates.
As time goes by, the increasingly large debt burden could also force the government of Uncle Sam's country to restructure their debt. According to Gundlach, this is something that has never happened before.
"I am concerned that the federal government may be forced to restructure the Treasury debt," he concluded.
DoubleLine Capital Investment Management Company executive Jeffrey Gundlach estimates that a United States (US) recession will occur as early as this year. This is because higher interest rates have put pressure on consumers and companies in the US.
Gundlach said signs of trouble in the US economy had emerged, such as rising credit card delinquencies and weaker retail sales data indicating the possibility of an economic contraction occurring sooner than the risk of an inflationary rebound.
"There are a lot of recession signals out there," Gundlach said when spoke at a webinar hosted by David Rosenberg, founder and president of Rosenberg Research
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