Jeffrey Gundlach warns we may be repeating the mistakes that led to the Great Depression.
The bond investor was asked for his view on the rising trade tensions between the U.S. and China.
"It's not a positive. I mean it is really interesting when I was in elementary school and high school we talked about the Great Depression ... [What] my teachers told me was that the Great Depression was caused by the Federal Reserve raising interest rates prematurely in a not so strong economy and also the Smoot–Hawley Tariff Act," he said.
Gundlach compared what happened in the 1930s to the current state of the economy cycle. He also noted how central banks are in the process of withdrawing monetary stimulus.
"So here we are. We are raising interest rates late in the cycle," he said. "Laid on top of that quantitative tightening ... on top of that we're now talking about tariffs, so one can put together a scenario that we're stumbling our way into a policy mistake."
The Great Depression is considered to be the biggest economic collapse of the XX - century. During the crisis, international trade fell by more than 50% and unemployment in the US reached more than 25%. But the United States is far from being the most affected country. In some countries in Europe and Asia, unemployment ranges from 35% to 40%. The consequences of the crisis are the most severe in the highly industrialized urban centers.
Gundlach is founder and CEO of DoubleLine. He is known for his investment acumen in the fixed income markets. Barron's dubbed Gundlach the "The New Bond King" in 2011. DoubleLine has assets under management of more than $118 billion, according to its website.
Source: CNBC
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.