US markets are overhyped; ‘India is the place to be’

Jeffrey Gundlach, the outspoken founder and CEO of DoubleLine Capital, believes that the US economy is ‘overhyped,’ and that investors’ money would be better served in other markets – particularly India.

‘We are living off the kindness of strangers and they’re getting less kind all the time,’ he said of recent rate cuts and mounting debt.

‘Take the deficit away, there’s no room whatsoever,’ he added. ‘Take the debt away and there’s no growth.’

Gundlach made his comments Tuesday at the ETF Exchange conference in Miami, Fla., during a panel titled ‘Getting past T-Bill and Chill.’ During his session, Gundlach surmised that if you didn’t get the rate cuts you were hoping for a couple of weeks ago, and didn’t get the earnings you wanted, it’s not looking good for you.

In terms of recovering from the recession, Gundlach is not in the soft-landing camp; he opposes that idea and believes the term itself is just a new-aged phrase for a ‘Goldilocks’ economy – a problem-free utopian marketplace that doesn’t consider inconvenient realities. 

Gundlach said he’s seen these types of rosy predictions before – and had a similarly gloomy outlook. For example, Gundlach said he turned against the NASDAQ on September 30, 1999, when a slowing economy calmed fears about inflation and rate hikes, sending bargain hunters looking for blue chips and tech stocks. 

‘Then, the darn thing went up 90% in the fourth quarter,’ he said, ‘but a year later, I could’ve bought it back at 50%. So, don’t try and pick tops.’

The contemporary ‘tops’ he’s referring to are picks like the ‘Magnificent Seven.’ He’s soured on the S&P, as well, adding that ‘the S&P is really overdone.’’

One area where Gundlach expressed positive interest is in equities in Japan and India. He said he sees strong economic growth in India, like high service and manufacturing numbers.

‘India is the place to be,’ he said. ‘It has had a strong performance in technology and chip making.’

To feed economic growth in the United States, Gundlach believes we must move towards countries like India and steer clear of more ‘hostile countries’; India has an advantage over countries to which the US has previously looked for an investment advantage, like China, one of those reasons being India’s growing population, he added.

‘Now China has gone away, and everybody is looking for ex-China ETFs,’ he said.