Jeffrey Gundlach Says Almost All Financial Assets Are Now Overvalued

SPEAKER_2 (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Tracy Alloway (0:18)

Hello, and welcome to another episode of the Odd Lots podcast. I'm Tracy Alloway.

Joe Weisenthal (0:21)

And I'm Joe Weisenthal.

Tracy Alloway (0:23)

Joe, we're still in celebratory mode.

Joe Weisenthal (0:25)

Yes.

Tracy Alloway (0:26)

10-year anniversary.

Joe Weisenthal (0:27)

It's 10-year anniversary month, really. Yeah. And even next month, kind of 10-year anniversary month. So we can just extend this for a long time.

Tracy Alloway (0:33)

We could just make this, well, we should have made 2025 the Odd Lots 10-year anniversary year.

Joe Weisenthal (0:38)

Year, yeah.

Tracy Alloway (0:39)

But we're almost at the end of the year.

Joe Weisenthal (0:40)

That's right.

Tracy Alloway (0:41)

So we failed in that respect. But obviously, we're sort of reflecting on the past decade or so at Odd Lots, and things that have or haven't changed in markets. And one thing I've been thinking about a lot is what's been going on in the bond market.

Joe Weisenthal (0:54)

Yeah, you can't, well, I think, look, there is nothing that's more different in 2025 versus 2015 than what's going on in fixed income, right?

Tracy Alloway (1:03)

So you say that, and it is true. You know, if you look at the benchmark 10-year yield, okay, sure, we're at 4% now, above 4%, and in 2015, we were at like 2%, right? That's changed. And we went through inflation, which is something we hadn't experienced for a pretty long time in, you know, previous years. But I also feel like it's changed, but a lot of it hasn't. A lot of the discussions haven't changed. If I think about what we were discussing back in 2015, it was stuff like who's going to buy US treasuries? Who's going to fund the US deficit? Bond vigilantes. I mean, how many years have we been talking about bond vigilantes now? The credit market, it was whether or not investors are being adequately compensated for the risk they're taking on. And the funny thing is now, if you look at spreads on junk-rated bonds, if you didn't think they were being adequately compensated at like 7.2% in 2015, I wonder what you think when you look at spreads of 6.4% in 2025

Joe Weisenthal (2:04)

This is a really good point, actually, because especially lately, obviously, we've had all of these. You know, we've had a number of credit events, these little blow ups. Jamie Dimon used the term cockroaches, et cetera. But by and large, spreads, which were sort of infamously narrow last decade, remain quite narrow by historical terms.

Tracy Alloway (2:23)

I feel like we should just mention here, we are recording on November 10th.

Joe Weisenthal (2:26)

Oh, yeah.

Tracy Alloway (2:27)

Things are changing fast in the credit market. There's a little bit of nervousness creeping in.

Joe Weisenthal (2:31)

Definitely.

Tracy Alloway (2:31)

But you're absolutely right. By and large, spreads are at pretty low levels, and people have been complaining about it for a long time now. Well, speaking of credit, you also have the rise of private credit, which is something we were talking about even back in 2015

Joe Weisenthal (2:47)

I wasn't. You were.

Tracy Alloway (2:47)

Well, no. We both were. But we called it something different. We called it shadow banks and BBCs and all of that.

Joe Weisenthal (2:55)

But that is a space that's much bigger, much more interest, much more scrutiny. I mean, just the whole orders of magnitude bigger since 2015 I don't think people have any real handle on what risk scenarios look like, the quality of the underwriting, et cetera. So this is definitely something. And we've been talking about it for years, but it continues to grow. And with some of these called cockroaches, et cetera, more interest in what's really going on.

Tracy Alloway (3:21)

Right. So things have changed, but things have also kind of stayed the same in some respects. But I'm very happy to say we do, in fact, have the perfect guest to talk about all of this. Someone who has been writing and conversing and going on TV and talking about a lot of these themes for-

Joe Weisenthal (3:38)

And making a great career directly investing in all of these things.

Tracy Alloway (3:41)

Actually investing based off some of these ideas. We're going to be speaking with Jeff Gundlach. He is, of course, the founder and CEO of DoubleLine Capital, someone we've wanted to get on the show for a long time. So Jeff, thank you so much for coming on Odd Lots.

Jeffrey Gundlach (3:54)

Well, thanks for having me. I'm looking forward to our discussion today.

Tracy Alloway (3:58)