DoubleLine Capital CEO Jeffrey Gundlach said he’s excited about the investing opportunities different asset classes offer in 2023 after many went through a massive correction last year. He also highlighted his favorite corners of the market. The so-called bond king said the Federal Reserve’s late reaction to soaring inflation led to severe sell-offs in many assets last year, but now many pockets of the markets appear attractive. “Bonds were hopeless; stocks were hopeless,” Gundlach said in an investor webcast on Tuesday, referring to the asset classes’ performance last year. “The Fed was way behind the curve, and you knew that you were headed into a horror show. So it turned into a dumpster fire. And now relative to fixed income in particular, it’s absolutely exciting in the fixed income market.” Firstly among government bonds, Gundlach said he favors long-dated Treasurys and predicts the yield on 30-year Treasury bonds could go up 30% in a deep recession. Bond yields move inversely to prices. Then in the credit market, he said securitized products present good buying opportunities, especially AAA-rated commercial mortgage-backed securities, as opposed to broader investment grade corporate bonds. The widely followed investor previously said investors could easily build a portfolio that yields an 8% return by buying safe government bonds while shopping for riskier, more opportunistic credits. In terms of stocks, Gundlach said he “tremendously” favors non-U.S. equities, especially emerging market stocks on the back of a peaking dollar. He added that if the EM Currency Index climbed above its 200-day moving average, it would be a “massive tailwind.” The dollar hovered around its weakest level in seven months on Tuesday versus the euro and a group of other major currencies. The DXY US Dollar Currency Index has fallen 8% from a 20-year high of 114.78 on Sept. 28. “I think the dollar is headed lower,” Gundlach said.
