Billionaire investor Jeff Gundlach said stocks are oversold and he expects stocks to be higher ahead of the next Fed Reserve session. Gundlach also said the Fed was “very late” and that Fed Chairman Jerome Powell did an “ok” job today.
“I think the stock market was grossly oversold, I think commodities were grossly overbought and so I’m not surprised we’ve had relative market stability in this Fed decision and I expect what the oversold continues to advance,” said the DoubleLine. The founder and CEO of Capital said in an interview with CNBC.
The Federal Reserve’s policy arm raised the target range for the federal funds rate by 25 basis points to 0.25%-0.5%, in the first increase since 2018 and the first time rates have been higher. above the effective lower bound since the pandemic shook the markets in March 2020.
“I think the market likes that the party is going on,” Gundlach said. “They kind of like that the Fed is behind the curve for now, even if that means it could accelerate and move ahead of the curve. For now, rates are still very dovish. “
All but one of the FOMC members voted for the 25 basis point rate hike; St. Louis Fed President James Bullard, the only dissenting vote, preferred a 50 basis point hike to 0.50%-0.75%.
“I think the market will turn around once the Fed raises rates a couple of times and if they start the roll off, which he sort of brought up as the base case at the next meeting,” he said. Gundlach added. “I think that’s where you have the double whammy.”
Separately, he added in the interview that “I think the bonds are broadly okay despite their poor valuation.”
He also said he would prefer bitcoin (BTC-USD) to gold by the next Fed meeting.
Last month, Gundlach warned that the Federal Reserve would likely trigger a recession as it seeks to raise interest rates in the face of a growing inflationary threat.