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Gundlach, whose Los Angeles-based firm manages more than $140
billion in assets, said valuations across financial markets
appear stretched given massive amounts of global economic
stimulus in response to the coronavirus pandemic.
"We remain mired in a house of mirrors," Gundlach said on a
webcast.
In a wide-ranging presentation, he noted that some long-term
market trends may be stalling, such as the outperformance of
U.S. equities versus the rest of the world and large-cap U.S.
equities rallying more than small-caps.
At the same time, he predicted that the United States may
experience additional rounds of layoffs focused on
middle-management as companies make some work from home policies
permanent given worker preferences.
The U.S. economy shed jobs for the first time in eight months in
December, with the majority of job losses coming in sectors such
as hospitality and leisure that remain battered by the
coronavirus pandemic.
Asian emerging market stocks have rallied at the start of the
year, with South Korean shares up nearly 10% and China's CSI 300
index up 7.4%. The U.S. benchmark S&P 500, by comparison, is up
1.2% over the same time.
Gundlach noted that he has shifted his outlook for bitcoin to
neutral from overweight. The cryptocurrency dropped more than
11% on Monday and remains 15% below the all-time high it hit on
Jan. 9.
"This looks like a dangerous market with this type of
volatility," Gundlach said. "I don't like having to worry that
I'm going to lose 20 percent in an hour."
(Reporting by David Randall; editing by Richard Pullin)
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