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‘Bond King’ Jeffrey Gundlach says Bernie Sanders is the biggest risk to the financial markets in 2020

Jeffrey Gundlach speaking at the 2019 SOHN Conference in New York on May 6th, 2019.
Adam Jeffery | CNBC

DoubleLine CEO Jeffrey Gundlach said the financial markets might have to brace for a Bernie Sanders scare in 2020.
The so-called bond king believes the independent senator from Vermont is the odds-on favorite to win the Democratic nomination in the 2020 presidential election.
Gundlach said in an investor webcast on Tuesday that the biggest risk to the markets in 2020 is Sanders becoming “more believed in as a real force” that investors will have to take more seriously. “Elizabeth Warren never rose to that,” Gundlach said.
Sanders trails only former Vice President Joe Biden in an average of national primary polls. He sits near the front of the pack in surveys of Iowa and New Hampshire. The 78-year-old candidate is pushing for policies including higher taxes on the wealthy, breaking up big banks and a $15 per hour minimum wage.
“Bernie is stronger than people think,” Gundlach said. “I think it will be taken more seriously as the field winnows. The financial markets broadly will have to deal with the fact that there could be a scare that Bernie Sanders is starting to become a plausible candidate for the nomination.”
Whether Sanders could win the election will largely depend on the economy, Gundlach said, adding people will need to turn more sour on capitalism and fond of socialism for that to happen.

Other market calls

Gundlach said his highest conviction idea is that the dollar will weaken going forward. He pointed to the greenback’s correlation with the U.S. twin deficits — current account and budget balance — which signals a depreciation in the dollar.
He also predicted emerging markets will outperform this year, saying investors should look for buying opportunities there for both equities and bonds.
The billionaire investor has been spot on with his predictions on gold. In June, he said he was a buyer of the bullion on expectations that the dollar would weaken. Gold prices rallied 12% in the past six months and hit a seven-year high on Monday.
Last month, Gundlach predicted the 10-year Treasury yield will rise to 2% based on his favorite indicator of U.S. rates — the ratio of copper to gold prices. The benchmark yield ended up climbing 13 basis points to above 1.9% in December. It dipped back below 1.8% recently on escalated Middle East tensions.
DoubleLine actively manages clients’ money and has $149 billion in assets under management.

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