{"id":3943,"date":"2023-05-04T01:30:01","date_gmt":"2023-05-04T05:30:01","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/deposits-are-going-to-keep-drifting-out-says-doublelines-gundlach-warning-of-echoes-of-sl-crisis-at-banks\/"},"modified":"2023-05-04T01:30:02","modified_gmt":"2023-05-04T05:30:02","slug":"deposits-are-going-to-keep-drifting-out-says-doublelines-gundlach-warning-of-echoes-of-sl-crisis-at-banks","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=3943","title":{"rendered":"\u2018Deposits are going to keep drifting out,\u2019 says DoubleLine\u2019s Gundlach, warning of echoes of S&L crisis at banks"},"content":{"rendered":"
\n

\u201cI\u2019m really turning more bearish,\u201d Jeffrey Gundlach, CEO of DoubleLine, told CNBC on Wednesday, after the Federal Reserve raised rates by another 25 basis points to the highest level since 2007.<\/p>\n

\u201cIt just seems to me that deposits are going to keep drifting out,\u201d Gundlach told the business network. \u201cI don\u2019t think this is the last chapter in this regional banking problem.\u201d<\/p>\n

\n

Read<\/strong>: The costs of helping banks alleviate deposit stress don\u2019t come cheap <\/p>\n

Gundlach\u2019s views contrasted with the reassuring message offered by Fed Chairman Jerome Powell on Wednesday, who looked to calm nerves about the U.S. banking system after the failure of First Republic Bank earlier in the week, and its subsequent takeover by JPMorgan Chase & Co.
\n JPM,
\n -2.12%<\/bg-quote>.<\/span>\n <\/p>\n

<\/p>\n
\n

\n \u201c<\/span> \u201cI\u2019m really turning more bearish.\u201d \u201d<\/span>\n <\/p>\n


\n \u2014 Jeffrey Gundlach<\/span>
\n <\/small><\/p><\/div>\n<\/p><\/div>\n

Gundlach, who was dubbed a \u201crock star\u201d bond-trader by Business Insider in 2010, said current banking stress \u201charkens back\u201d to the savings-and-loan crisis of the 1980s, when high inflation and a spike in interest rates caused customers to flee with their deposits, and left many smaller lenders reeling from losses on their mortgage holdings.<\/p>\n

The S&L crisis gave rise to the Resolution Trust Corp., which helped distressed debt investors sop up soured real-estate loans from banks at steep discounts, while also giving rise to the modern-day securitization business, where Wall Street packages up consumer and real-estate loans into bond deals.<\/p>\n

\u201cThis is kind of the same phenomena, and I don\u2019t really see what\u2019s going to make it stop, unless the Fed is going to cut interest rates, which there\u2019s no inclination of cutting interest rates at the next meeting,\u201d Gundlach said.<\/p>\n

Also read<\/strong>: PacWest stock plummets more than 50% after report of potential sale, other bank stocks join in decline <\/p>\n

While traders still expect rate cuts by the end of 2023, Gundlach doesn\u2019t think that will happen. He\u2019s instead bracing for defaults to rise in the high-yield
\n HYG,
\n -0.05%<\/bg-quote>,<\/span>
\n or \u201cjunk bond\u201d
\n JNK,
\n -0.12%<\/bg-quote>,<\/span>
\n market in the fourth quarter, and for pain to emerge in other risky parts of the market. <\/p>\n

\u201cWhen high-yield bonds are suffering, it\u2019s hard to make the case for equities,\u201d he said, adding that stocks get wiped out before corporate debt if a company collapses.<\/p>\n

Stocks closed near the session\u2019s low on Wednesday, with the Dow Jones Industrial Average
\n DJIA,
\n -0.80%<\/bg-quote>
\n down 270 points, or 0.8%, the S&P 500 index
\n SPX,
\n -0.70%<\/bg-quote>
\n falling 0.7% and the Nasdaq Composite Index
\n COMP,
\n -0.46%<\/bg-quote>
\n 0.5% lower.<\/p>\n

Other than Treasurys, assets Gundlach likes are higher-quality commercial mortgage-backed securities, even though mentioning it \u201cmakes people break out in hives,\u201d he said. <\/p>\n

Gundlach also sees the U.S. dollar
\n DXY,
\n -0.27%<\/bg-quote>
\n as likely to go lower this year. He bought gold
\n GC00,
\n +0.82%<\/bg-quote>
\n at $1,800 an ounce, and said it looks like it could go higher as the dollar takes a leg lower, and that emerging-market equities outside of China look interesting.<\/p>\n

Read<\/strong>: Why it\u2019s silver\u2019s time to shine<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

\u201cI\u2019m really turning more bearish,\u201d Jeffrey Gundlach, CEO of DoubleLine, told CNBC on Wednesday, after the Federal Reserve raised rates by another 25 basis points to the highest level since 2007. \u201cIt just seems to me that deposits are going to keep drifting out,\u201d Gundlach told the business network. \u201cI don\u2019t think this is the […]<\/p>\n","protected":false},"author":1,"featured_media":3944,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-3943","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\n\u2018Deposits are going to keep drifting out,\u2019 says DoubleLine\u2019s Gundlach, warning of echoes of S&L crisis at banks | iFintechWorld<\/title>\n<meta name=\"description\" content=\"\u201cI\u2019m really turning more 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