A risk-off mood is setting the stage for Tuesday, with stock futures in the red as Treasury yields keep reaching for the sky. Don’t look to JPMorgan CEO Jamie Dimon to calm things down, as he warned that even 7% interest rates are possible.
Gundlach says “the odds of recession in the first half or the second quarter of 2024 really needs to be respected,” and expects layoffs will pick up toward the end of this year and into early 2024. Drilling down, Gundlach says he’s shifted from low-quality to more high-quality bonds for around 25% of the portfolio. “I would say about 25% in 10-year longer Treasury bonds, certainly because they have potential to be a ballast [for] your portfolio against some positions,” he said
“And then I would say 25% in stocks, and there I don’t think you want the entire S&P SPX [so-called magnificent] seven that have driven the entire S&P year to date. They seem back in euphoria land,” he said. “So it’s a really balanced portfolio with a lot of it being in fixed income, you know, 25% in treasuries and 25% in credit, so half of the portfolio would be income generating, and that’s our portfolio. You put it together you get like 7%,” said Gundlach.
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