Gundlach says Trump ‘crazy like a Fox’ to blame Fed for stock market

CEO
and CIO of DoubleLine Capital Jeffrey Gundlach
REUTERS/Eduardo Munoz

• Jeff Gundlach, the CEO of DoubleLine Capital, said Thursday
  that President Donald Trump was “being crazy like a fox” for his
  rhetoric on the Federal Reserve. 
• Amid the worst stock-market sell-off of his presidency, Trump
  had said the Fed was “going loco” by continuing to raise interest
  rates.
• Gundlach said the Fed has entered auto-pilot mode, and would
  need to see weakness in the economy to stop raising rates. 

Count Jeff
Gundlach among the investors who are not on board with
President Donald
Trump’s attacks on the Federal Reserve. 

This week, amid the longest
stock-market sell-off of his presidency, Trump has
described the central bank as “crazy”
and “going loco” for raising interest rates. Bonds and

stocks have sold off since last week Thursday as investors
fear the impact of higher borrowing costs on financial
conditions. 

“When it comes to President Trump, it’s clear to me that he’s
being crazy like a fox with his Fed rhetoric,” Gundlach, the CEO
of DoubleLine Capital, said in a
CNBC interview on Thursday. 

He added that the Fed needed to see a material decline in the
economic data before it stopped raising rates.

“As long as inflation stays above 2%, as long as the markets
don’t throw too big of a fit, and as long as the inflation rate
is in the mid-2s, I can see the Fed continuing to tighten,”
Gundlach said.

“We’re in the place now — that auto-pilot place — where you need
the data to change to the downside.”

Fed Chairman Jerome Powell
said in September that the central bank did not “consider
political factors or things like that.” 

Gundlach agreed that interest rates were partly responsible for
the market sell-off. As yields rose in September, he made the
prescient call that the 30-year bond closing above the key
resistance level of 3.25% for two days in a row would be a
“game
changer” for markets. 

He said on Thursday that rates were likely to head higher.

“If you look at the charts and the way the market is behaving,
and you think about the trends that are underneath the bond
market, it wouldn’t be surprising at all to see the 30-year go to
4% before this move of the breakout above 3.25 is over,” he said.

“And the curve should probably steepen. Maybe the 10-year
Treasury makes it to 3.50 or 3.60 during that move.”

The 10- and
30-year yields were at 3.14% and 3.31% at 2:46 p.m. ET on
Thursday.

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