(Industry Leaders) - Whispers of a recession have continued to haunt 2023, despite evidence of inflation easing. Federal Reserve officials recently admitted that though US inflation has gone down, it still hovers close to danger.
Billionaire Jeffrey Gundlach, CEO of investment firm DoubleLine, appears to share the sentiment. In fact, the Bond King feels that America must prepare for the worst as the economic outlook “darkens” and recession 2023 sneaks its way in.
The DoubleLine CEO told Yahoo Finance last week that the debate around inflation is pointless and people must be ready to fight an economic downturn.
The billionaire urged people to pay heed to the signs and to prepare their businesses for the inevitable. He noted that the world will see “some real interesting, painful outcomes” whether the recession is severe or not.
JEFFREY GUNDLACH ON RECESSION 2023
The bond market veteran warned that recession could be on the way for over a year now. He highlights that the Federal Reserve is still planning to hike interest rates, signaling tough times ahead for businesses and individuals.
“People are always asking me this question: ‘How bad is the recession going to be?’ It doesn’t matter. As long as we’re going into a recession, you have to have a certain degree of protection. If it’s raining a half an inch an hour, you need an umbrella. If it’s raining two inches an hour, you still need an umbrella,” said the billionaire CEO. “In either case, you need an umbrella.”
Gundlach supported his theory by noting that a slowing economy and low credit quality translates to recession 2023, which will push up borrowing costs and increase defaults. The CEO’s firm DoubleLine manages around $100 billion in assets and the man himself is known for his insight and business acumen. After launching DoubleLine in 2009, he quickly outperformed rival bond-fund managers to eventually earn the title of “Bond King.”
In January, the billionaire noted that although odds for a recession 2023 have gone down considerably it is still above 50%. His views on the matter were recently echoed by JP Morgan chief Jamie Dimon who warned that inflation is still close to the danger zone.
UNCERTAINTY PREVAILS OVER US INFLATION
Treasury Secretary Janet Yellen said on February 27 that US inflation remains too high although it is possible to bring it down while maintaining a strong labor market.
The fluctuating scales of US inflation has investors preparing for recession 2023, although many hope that the tide will turn in the days to come.
Yellen admitted that inflation is too high, although it has been coming down in recent months. She also addressed the US debt ceiling and reassured stakeholders that extraordinary measures have been taken to prevent a financial catastrophe.
The Secretary stressed on the relevance of the dollar and that breaching the debt ceiling would inconceivable for the US “whose currency, the dollar, serves as the world’s reserve currency; a country with the deepest most liquid financial markets where Treasuries are the ultimate safe asset” and “with a credit rating the United States has always had.”
Gundlach’s financial predictions note that the US economy has been struggling to keep its head high amidst mounting problems and “the more you try to reduce the severity of problems, you’re going to end up ultimately having a very high severity problem.”
As fears of recession 2023 grow bigger, the billionaire CEO’s advice to investors is to take advantage of the opportunity in the bond market. Last month, he revealed that as the bond market is considerably cheaper than the stock market, people should spread out their portfolios. He believes that the bond market will prove much more rewarding this year and will help offset the effects of inflation.
By Christy Gren
February 28, 2023
Christy Gren is an Industry Specialist Reporter at Industry Leaders Magazine she enjoys writing about Unicorns, Silicon Valley, Startups, Business Leaders and Innovators. Her articles provide an insight about the Power Players in the field of Technology, Auto, Manufacturing, and F&B.
