|
Gundlach, who correctly predicted government
bond yields would plunge in 2014, said on his annual outlook
webcast that 35 percent of Standard & Poor's capital
expenditures comes from the energy sector and if oil remains
around the $45-plus level or drops further, growth in capital
expenditures could likely "fall to zero."
Gundlach, the co-founder of Los Angeles-based DoubleLine, which
oversees $64 billion in assets, noted that "all of the job
growth in the (economic) recovery can be attributed to the shale
renaissance." He added that if low oil prices remain, the U.S.
could see a wave of bankruptcies from some leveraged energy
companies.
Brent crude <LCOc1> approached a near six-year low on Tuesday as
the United Arab Emirates defended OPEC's decision not to cut
output and traders wondered when a six-month price rout might
end.
Brent has fallen as low as just above $45 a barrel, near a
six-year low, having averaged $110 between 2011 and 2013.
Gundlach said oil prices have to stop going down so "don't be
bottom-fishing in oil" stocks and bonds. "There is no hurry
here."
Energy bonds, for example, have been beaten up and appear
attractive on a risk-reward basis, but investors need to hedge
them by purchasing "a lot, lot of long-term Treasuries. I'm in
no hurry to do it."
High-yield junk bonds have also been under severe selling
pressure. Gundlach said his firm bought some junk in November
but warned that investors need to "go slow" and pointed out "we
are still underweight."
Gundlach said U.S. stocks could outperform other countries'
equities as the economic recovery looks stronger than its
counterparts, though double-digit gains cannot be repeated.
He also reiterated that it's possible yields on the benchmark
10-year Treasury note could drop to 1 percent in 2015. The
10-year yield traded around 1.91 percent on Tuesday, little
changed from late on Monday after hitting 20-month low of 1.8640
percent.
"The 10-year Treasury could join the Europeans and go to 1
percent. Why not?" Gundlach told Reuters last month. "If oil
goes to $40, then the 10-year could be going to 1 percent."
The yield on 10-year German Bunds stood at 0.47 percent on
Tuesday.
(Reporting by Jennifer Ablan; Editing by James Dalgleish and
Alan Crosby)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
|
