DoubleLine Capital CEO and Wall Street “Bond King” Jeffrey Gundlach is not worried about a possible recession in 2020 even though he doesn’t think China and the U.S. will get a trade deal done anytime soon.
“We’ve never had a recession without negative leading indicators,” Gundlach told CNBC’s Scott Wapner on Wednesday. “Leading indicators are low right now … but numbers that are rolling off from the December-January period are quite low. So our forecast is that those are going to improve, which makes it very unlikely that we’ll have a recession in the next six to 12 months.”
Gundlach noted that consumers’ perception of current conditions would have to drastically deteriorate while weekly jobless claims spike up for a recession to take place. Consumer sentiment has tapered off in recent months but remains at relatively high levels. Weekly jobless claims, meanwhile, fell to a seven-month low in the week that ended Nov. 30.
Earlier this year, investors grew concerned about the potential for a recession as global manufacturing activity slowed down while business sentiment was dented by the U.S.-China trade war. Manufacturing activity has stabilized since then while recent optimism around a possible trade deal between the world’s largest economies lifted stocks to record highs in October and November.
However, uncertainty around trade increased this week after a slew of mixed reports and comments from a top U.S. official raised questions about both sides striking a deal before a Sunday deadline. If a deal is not reached by then, additional U.S. tariffs on Chinese goods will take effect.
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