Jeffrey Gundlach Says Almost All Financial Assets Are Now Overvalued

Stocks are overpriced. Bonds are overpriced. And private assets are a powder keg. This is the view of Jeffrey Gundlach, the founder and CEO of DoubleLine Capital. As part of our 10-year anniversary celebration of the Odd Lots podcast, we've been talking to some big names in markets and economics to get a sense of how they see the world and what's changed in recent years. One major change, obviously, is the end of ZIRP. And while Treasuries have rallied modestly this year, Gundlach sees mounting pressure on government balance sheets pushing yields higher going into the future. We also talk about gold, the greater opportunities for a US-based investor when looking internationally, and why everyone should be holding more cash in their portfolios. Subscribe to the Odd Lots NewsletterJoin the conversation: discord.gg/oddlotsSee omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Tracy Alloway?

  There are some market stories where you want every detail. Joe and I have made quite a few podcasts on that basis. But sometimes you've only got 10 minutes and just want to know what's moving markets fast. That's the Barclays Brief Podcast. Every week, experts from Barclays Markets and Research get you up to speed on what's happening and what to watch next. Concise, focused, and brief. Search Barclays Brief wherever you get your podcasts.

• 0:26Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 1:08Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:49Speaker 02

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• 2:24Speaker 03

  Bloomberg Audio Studios, podcasts, radio, news.

• 2:39Tracy Alloway?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

• 2:43Joe Weisenthal?

  And I'm Joe Weisenthal.

• 2:44Tracy Alloway?

  Joe, we're still in celebratory mode.

• 2:47Joe Weisenthal?

  Yes.

• 2:47Tracy Alloway?

  10 year, 10 year anniversary.

• 2:49Joe Weisenthal?

  It's 10 year anniversary month, really.

• 2:51Tracy Alloway?

  Yeah.

• 2:51Joe Weisenthal?

  And even next month, kind of 10 year anniversary month. So we can just extend this for a long time.

• 2:55Tracy Alloway?

  We could just make this, well, we should have made 2025 the Odd Lots 10 year anniversary year.

• 3:00Joe Weisenthal?

  Yeah.

• 3:01Tracy Alloway?

  But we're almost at the end of the year.

• 3:02Joe Weisenthal?

  That's right.

• 3:02Tracy Alloway?

  We failed in that respect. But obviously, we're sort of reflecting on the past decade or so at Odd Lots and things that have or haven't changed in markets. And one thing I've been thinking about a lot is what's been going on in the bond market.

• 3:16Joe Weisenthal?

  Yeah, you can't, well, I think, look, there is nothing that's more different in 2025 versus 2015 than what's going on in fixed income, right?

• 3:24Tracy Alloway?

  So you say that, and it is true.

• 3:27Joe Weisenthal?

  Okay.

• 3:28Tracy Alloway?

  You know, if you look at, if you look at the benchmark 10 year yield, okay, sure, we're at 4% now, above 4%, and in 2015, we were at like 2%, right? That's changed. And we went through inflation, which is something we hadn't experienced for a pretty long time in, you know, previous years. But I also feel like it's changed, but a lot of it hasn't. A lot of the discussions haven't changed. If I think about what we were discussing back in 2015, it was stuff like, who's going to buy US Treasuries?

• 3:57Joe Weisenthal?

  Sure.

• 3:57Tracy Alloway?

  Who's going to fund the US deficit? Bond vigilantes?

• 4:01Joe Weisenthal?

  Yeah.

• 4:01Tracy Alloway?

  I mean, how many years have we been talking about bond vigilantes now? The credit market? It was whether or not investors are being adequately compensated for the risk they're taking on. And the funny thing is now, you know, if you look at spreads on junk rated bonds, if you didn't think they were being adequately compensated at like 7.2% in 2015, I wonder what you think when you look at spreads of 6.4% in 2025.

• 4:26Joe Weisenthal?

  This is a really good point, actually, because, and especially lately, obviously, we've had all of these. You know, we've had a number of credit events, these little blowups, Jamie Dimon used the term cockroaches, et cetera. But by and large, spreads, which were sort of infamously narrow last decade, remain quite narrow by historical terms.

• 4:45Tracy Alloway?

  I feel like we should just mention here, we are recording on November 10.

• 4:48Joe Weisenthal?

  Oh, yeah.

• 4:48Tracy Alloway?

  Things are changing fast in the credit market. There's a little bit of nervousness creeping in.

• 4:53Joe Weisenthal?

  Definitely.

• 4:53Tracy Alloway?

  But you're absolutely right. By and large, spreads are at, you know, pretty, pretty

• 4:57Joe Weisenthal?

  Very narrow.

• 4:58Tracy Alloway?

  Pretty low levels and people have been complaining about it for a long time now. Well, speaking of credit, you also have the rise of private credit, which is something we were talking about even back in 2015, but back then.

• 5:08Joe Weisenthal?

  I wasn't, you were.

• 5:09Tracy Alloway?

  Well, no, we both were, but we called it something different. We called it, you know, shadow banks and BDCs and all of that.

• 5:16Joe Weisenthal?

  But that is a space that's much bigger, much more interest, much more scrutiny. I mean, just a whole, you know, orders of magnitude bigger since 2015. I don't think people have any real handle on like what risk scenarios look like, the quality of the underwriting, et cetera. So this is definitely something and it's, you know, we've been talking about it for years, but it continues to grow and with some of these called cockroaches, et cetera, more interest in what's really going on.

• 5:43Tracy Alloway?

  Right, so things have changed, but things have also kind of stayed the same in some respects. But I'm very happy to say we do in fact have the perfect guest to talk about all of this. Someone who has, you know, been writing and conversing and going on TV and talking about a lot of these themes for.

• 5:59Joe Weisenthal?

  And making a great career directly investing in all of these things.

• 6:02Tracy Alloway?

  Actually investing based off some of these ideas. We're going to be speaking with Jeff Gunlock. He is of course, the founder and CEO of Double Line Capital, someone we've wanted to get on the show for a long time. So Jeff, thank you so much for coming on All Thoughts.

• 6:16Speaker 05

  Well, thanks for having me. I'm looking forward to our discussion today.

• 6:20Tracy Alloway?

  So let's start big picture because I actually, we can take this in, you know, a bunch of different directions. But when you look at the treasury market and when you look at the credit market, which are you more concerned about at the moment? Because I know you've voiced some worries about both of these things.

• 6:37Speaker 05

  Yeah, I'm concerned about the financing of long-term treasuries, primarily because we're issuing a lot of them. And there's inflationary policies that are being run and probably likely to be further doubled down upon when Jerome Powell leaves as Fed Chairman. I mean, we've got Scott Bessent as the Treasury Secretary, and he's talking about, well, he's basically mimicking what the President says. He basically says rates should be a point lower, two points lower. I've heard different numbers out of President Trump. He wants rates at 2%, 3%. But inflation is running above 3% on the headline CPI, and it's not likely to come

• 7:21Speaker 05

  down to the Fed's 2% target. And so there's a lot of interest in artificially lowering interest rates and perhaps taking the maturities of treasuries ever increasingly to under one year in maturity. A lot of investors aren't aware of the fact that something like 80% of all treasuries issued in the last 12 months, and this has been the case for the last few years, are less than one year. The treasuries that are issued longer than 20 years, so 20 years out to 30 years, is only 1.7% of the treasuries issued in the last 12 months. And what's interesting about that is the Fed has been cutting interest rates over the last 13 months.

• 8:02Speaker 05

  And historically, when the Fed cuts interest rates, of course, short-term interest rates decline definitionally at the Fed funds level, but also two-year Treasury rates decline, five-year Treasury rates decline. In fact, long-term Treasury rates have always declined, subsequent to the first cut by the Federal Reserve, and particularly when you're in a sequence of Federal Reserve cuts, and that's certainly been the case with now 150 basis points. But this time, all interest rates outside of the two-year are higher than they were before the Fed's first rate cut. That just never happens historically. Another interesting thing that has never happened historically is earlier this year,

• 8:45Speaker 05

  during the tariff tantrum of late March and early April, stock market had a pretty significant correction. And it was going back, back to around 2000, it was the 13th correction in the S and P 500, defined by a drop of 10%, at least 10%. In the, in the 12 corrections before the one here in 2025, the dollar went up when the stock market went down as a flight to quality asset. That didn't happen this time. When we went into that correction earlier this year, the dollar went down. It usually goes up by around 8%. And in the first quarter, early second quarter of this year, it went down by around 10%. So what is happening here seems to be that the, the, the pattern

• 9:30Speaker 05

  of interest rate movements and currency movements, and what's a flight to quality asset and what isn't, seems to have changed. Because interest rates have bottomed at the long end of the yield curve. And I've been saying this for five years now, that the secular decline in interest rates at long, at the long-term of maturities is over. And in fact, in the next recession, long-term interest rates are likely to go higher, not lower. And what's happened since the Fed started cutting corroborates this somewhat radical idea of mine. When it comes to credit, spreads are tight, although you correctly noted that they're not on the tights of the year anymore. They're starting to widen. I think jump bond spreads are up by about 30 or 40 basis points.

• 10:15Speaker 05

  And yes, spreads have remained tight for a long time. But one thing that you also referenced a little bit is the quality of the public corporate credit market is better than it's been historically. It's way better than it was prior to the global financial crisis, where you've had all kinds of garbage lending going on. But in recent years, the garbage lending has not gone to the public markets. The garbage lending has gone to these private markets. And private credit has been very popular and is now increasingly been over allocated to by large asset pools. I remember Harvard University, for example, they've got like a 50-odd billion dollar endowment.

• 10:58Speaker 05

  And their donors pulled back when they had uprisings on campus and the donors didn't like what was going on. So they stopped donating for a while and Harvard had no money. A fifty odd billion dollar endowment and they couldn't pay salaries. They couldn't pay the light bills. They couldn't pay basic maintenance. They had to go to the bond market to borrow. They tried to borrow about four billion dollars, I think. I think they got away with about two and a half billion dollars. But it's fascinating that you have a huge asset pool that doesn't have liquidity to pay the bills. And I've also heard that another large endowment, I think it's Yale University, I might be wrong there, but I think it's Yale, they're talking about selling some of their private equity stakes because they don't have any liquidity either. And this

• 11:42Speaker 05

  has bled over into the private credit market. And I was, I was at a Bloomberg broadcasted event in Hollywood, Paramount Studios, I think it was. And I got there early and there was a panel before my fireside chat where the members of the panel were all significant executives at some of the largest private credit firms. And it was really interesting to hear them talk because the tone of the message they were giving was far from bullish. You know, it's kind of like when, when you talk to a junk bond manager, say, what's the outlook for 2026? And the most bearish thing they're going to say is, we don't think spreads can get any tighter, but we think they're, that's the most bearish thing they're going to say, you're going to earn

• 12:25Speaker 05

  the coupon. Well, these private credit people were using words like tension and lack of runway. These are all euphemisms for bad things happening. And I, I think that, you know, we've started to see defaults. And there's something on the Bloomberg News Wire today, it's on Top Go, that speaks of a home renovation business that was private credit, like a hundred and fifty million dollar issuance of private credit, and it went to zero. Yep. It's called Renovo, apparently. There are firms that had it at a hundred a few weeks ago.

• 13:04Tracy Alloway?

  Yeah, a month ago.

• 13:04Speaker 05

  And it went to zero.

• 13:09Speaker 05

  Pardon me, a month ago? Yeah, but anyway, it's called Renovo or something like this. And, and the funny thing is, the argument for private credit has always been a sharp ratio argument at the center of it. Is that, you know, you get the same return or maybe a little better return than the public markets, but you have much lower volatility. Well, that's, that's like saying that you have no risk in a CD. You don't have any interest rate risk in a CD. If you buy a five-year CD, the price never changes. Well, that's just because you don't market to market. You know, of course, a CD that you bought five years ago at one and a half percent is not worth, you couldn't sell it at, at a par value. You're going to have to take a discount on it.

• 13:52Speaker 05

  But that's what, that's the, that's the private credit argument. What really happens, and this was really borrowed from private equity, which they use the sharp ratio argument there too. They say, well, you'll get the same return or maybe a little better return out of private equity than you will out of the S and P 500, but it's much lower volatility. So what happens is when the S and P 500 goes from 100 to 50, the private equity firms mark their positions down from 100 to 80. Now, they're not worth 80. You couldn't sell them at 80, but that's where they get marked. And then when the, when the market recovers back to 100 on the S and P 500, they mark their private equity up to 100. So low and behold, both the S and P 500 and the private equity have a return of zero, but the, the volatility of the S and P 500 is more than double

• 14:37Speaker 05

  that of the private equity. So it's basically a sharp ratio argument based upon the volatility being underreported. And that's, that goes on in all of these, these so-called private markets. And now it's very fascinating that this Renovo in the article today, it basically said that they had a Chapter 7 filing and bankruptcy filing, and their assets, their liabilities were shown, listed as being between 100 and 500 million dollars. You just, you, you check a box, you don't give a specific number. So there's ranges, and the range that their liabilities were in was between 100 and 500 million dollars. Their assets were listed as less than $50,000.

• 15:20Speaker 05

  Just fifty thousand dollars. Are you trying to tell me that these big private equity firms and private credit firms with all of their resources aren't aware of that type of debt to equity ratio? That's obviously far into a bankrupt situation. So what's going on here that private equity firms had this marked a few weeks ago at a hundred? When it was obvious that their liabilities were vastly, vastly higher than their equity. That should have been marked down to, I don't know, fifty, twenty, five, one? But it's at a hundred. What's going on? It's like there's only one price for private, there's only two prices for private credit. Yeah.

• 16:04Speaker 05

  One hundred, zero. That's it. And I heard an announcement made from these private equity people at that Bloomberg event. They're sort of like, as long as we believe that we're going to get paid back, we leave it at a hundred. Well, okay, but once, once you have one hundred and fifty million plus dollars of liabilities and less than fifty thousand dollars of assets, it's pretty unlikely they're going to get paid back. The price should not be at a hundred, but that's what's going on. And so you have that sharp ratio argument. Then you have another argument for private credit, which is, had been somewhat valid, was just recent history, I mean, performance. The five-year performance of private credit a couple of years ago was definitely better than the five-year performance, at least reported performance,

• 16:49Speaker 05

  of, of, of public credit. Private credit did better than public credit. So you had a, a, a trailing performance argument, which of course, trailing performance is no guarantee of future results, which is stated on every single prospectus. But recently, private credit is not outperforming. Obviously with bonds going from a hundred to zero in a matter of weeks, the public market has been performing better than the private market. And then the most ridiculous argument of all for private credit has been Private credit belongs in every portfolio because it lets you sleep at night because it helps you ride out the volatility of your public credit. Again, that's just a repackaging of the volatility. If you don't market to market, there's no volatility.

• 17:31Speaker 05

  But if the price goes from 100 to 0 in a matter of a few weeks, there's something untoward is going on. And so I'm very, very negative on those types of, you know, non-transparent markets. It reminds me, I've been saying this for probably two years now, that the next big crisis in the financial markets is going to be private credit. It has the same trappings as subprime mortgage repackaging had back in 2006. Now, it took a couple of years for it to totally unravel. So this stuff doesn't happen in a week or a year even, but I'm very negative on that.

• 18:12Speaker 05

  And so where we stand on fixed income is we don't like long-term treasury bonds at all because we don't, we don't think people are going to want them. During the next recession, the deficit is going to go up because it always goes up during a recession. The deficit, the official deficit is about 6% of GDP. That's a level that was associated historically with the depths of recessions. Yeah. Because of course, it goes up during recessions. Well, when you go into recession, the deficit goes up on average by, well, it depends what long, how long a time series you use. But if you go back for about 50 years, it goes up by about 4% or 5% of GDP. And more recent recessions, it's been a lot worse than that.

• 18:54Speaker 05

  We could argue, you could make the case somewhat plausibly, that the global financial crisis, it was kind of weird and that the COVID lockdown recession was kind of weird. But during those, the deficit went up by about 8% of GDP on average. So what happens if the deficit goes from 6% of GDP to 10% of GDP or 12% of GDP or 14% of GDP? All of those are possible. What happens is that you have to blow up the entire system because all the tax receipts would go to interest expense. Uh, we're already at a large percentage, uh, about one point four, one point five trillion dollars of the seven trillion dollar budget is now interest expense.

• 19:37Speaker 05

  Of course, we have a two trillion dollar budget deficit, so there's only five trillion dollars of taxes. And, you know, thirty percent of that is going to interest expense and that is going to go higher. And as interest rates are still elevated from levels of six or five to seven to twelve years ago, the bonds that are rolling off have an average coupon for the next few years of three, of a little bit below three percent. Let's just call it three percent. That means that with Fed funds at three and seven eights and treasuries at four up to four and a half, that means that on average, you're going to have higher interest expense on just rolling over the existing debt. And of course, you're ladling on a couple trillion dollars in a non-recessionary period.

• 20:19Speaker 05

  And so I did a thing at Grant's, uh, conference, Jim Grant, his fortieth anniversary conference. And a couple of years ago, and I did a, a very, my, the simplest, most succinct presentation I've ever given in my career. I just went through the interest expense problem using plausible assumptions on where the deficit's going. And, but the conclusion is, and this is an art and not a science, so there's a lot of assumptions that can be challenged. But putting it in, in a rather pessimistic light, so I don't say this is the base case. But by the year twenty thirty, so five years from now, it's quite plausible that on the current tax system and the current borrowing regime, that we have sixty percent of all tax receipts going to interest expense.

• 21:05Speaker 05

  You can make it really, really draconian and say, what if interest rates go up to nine percent on treasuries? And what if the budget deficit goes to twelve percent of GDP? And you make these kinds of, uh, you know, pessimistic assumptions. Well, by around twenty thirty, you would have one hundred twenty percent of tax receipts going to interest expense, which of course is impossible. So that means that something has to happen. And we're not talking about, you know, early in my career, people were saying, we can't keep borrowing this money. And that was under Reaganomics, which people thought was a bad idea because it was deficit spending. And they said, you know, the way we're going, we're going to be broke. We'll be out of money in social security and other entitlement programs by 2050.

• 21:48Speaker 05

  And then 10 years later, you know, they moved it forward to 2040. So it was initially supposed to be like a 60-year problem. And then 10 years later, it was a 40-year problem. And then it was a 20-year problem. And now it's like a five-year problem, which means it's a problem in real time. And something has to be done about this. So long-term treasuries look vulnerable to me. I still like short-term treasuries because I think the Fed is likely to cut interest rates. And that definitionally leads to lower interest rates on, say, five years and immaturities.

• 22:20Tracy Alloway?

  Jeff, first of all, I hesitate to ask a question here because, you know, we could just let you go on and hear you tear particularly private credit to shreds. That was great. And thank you also for the plug for both Bloomberg Journalism and the Bloomberg Hollywood event. That's called Screen Time. That's our conference there. And then secondly, Joe, I was going to make a Drake joke about private credit. I was going to say going from 100 to zero real quick in private credit could be a really terrible Drake song, like most of them are. But that was five minutes ago. So I don't think my joke is relevant anymore.

• 23:11Tracy Alloway?

  There are some market stories where you want every detail. Joe and I have made quite a few podcasts on that basis. But sometimes you've only got 10 minutes and just want to know what's moving markets fast. That's the Barclays Brief podcast. Every week, experts from Barclays Markets and Research get you up to speed on what's happening and what to watch next. Concise, focused, and brief. Search Barclays Brief wherever you get your podcasts.

• 23:38Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 24:20Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 25:01Joe Weisenthal?

  You know, in the 2010s, when we started this podcast 10 years ago, an investor could have a really nice, you know, 60-40-ish portfolio, and there are all sorts of beautiful things with that, particularly that sort of inverse correlation that exhibited between treasuries and stocks. So that, as you mentioned, typically in a downturn, you get a stock market swoon. Well, at least the slug of fixed income that you own, maybe it outperforms then, gets a little smoothing, but maybe you get some positive real rates, it all works out really well. I understand, okay, maybe there's still some opportunities in the short end because rates are going to go lower, et cetera. Maybe private, maybe public credit has better standards than private credit, we'll get into that. But like, do we have to go back

• 25:45Joe Weisenthal?

  and revisit just the case or the, for even having fixed income in a diversified portfolio? And I know that, look, you're a fixed income portfolio manager, so I understand this is an existential question for you. So I know there's, but, you know, like, you know, how should, how would you sell the case for even having it?

• 26:03Speaker 05

  It would be an existential question for somebody that's been five to eight years in the business and it's just getting going.

• 26:09Joe Weisenthal?

  Yeah, alright.

• 26:10Speaker 05

  Because, you know, I've been, I've been at this for well over forty years. And I really don't, don't need to make money by managing other people's money at all. Uh, so I, I'm very honest. What people like about me is they say, I get, I get stopped on the street and people say, I see you on, on TV. I really love, I'm really a fan of yours because you're a straight shooter. You know, I don't, I don't talk any kind of look whatsoever, but I, I think that right now. I think financial assets broadly should be lower allocated, have a lower allocation than typical. You talk about sixty, forty, that means you a hundred percent in financial assets. I think in equities today, investors should have maximum forty percent.

• 26:52Joe Weisenthal?

  Okay.

• 26:53Speaker 05

  Uh, and, and most of that in, in non-US equities, particularly if you're a dollar-based investor, like any American would, would normally typically be. I think you want, the dollar's going to fall. And so you're not going to be making money on the currency translation, you're going to be losing money. And that's certainly been the case so far this year. Again, things are acting differently, uh, now that we're in a rising rate regime and not a falling rate regime. You're doing much better as a dollar-based investor in local currency emerging market stocks. I mean, they're, they're up something like twenty-five percent year-to-date for a dollar-based investor. You're even better off in European stocks because the dollar's down versus, versus the euro.

• 27:33Speaker 05

  So I think the, the amount that people should have in fixed income should probably be about twenty-five percent, not forty percent. Maybe twenty-five percent. And I think that it should be some of it in non-dollar fixed income, again, emerging market fixed income, which is by far the highest performing sector for dollar-based investors in the fixed income market this year. And so that leads to forty percent that you're not, if, if you're at forty percent in stocks and twenty percent or twenty-five percent in bonds, you've got another, you know, thirty-five, forty percent to allocate. And I've been very, very bullish on gold. We do a, a podcast that gets up on our website in early January every year.

• 28:15Speaker 05

  It's called, uh, Round Table Prime, Double Line Round Table Prime. And we have a bunch of thought leaders there. It's the same group every year. And we go through, one of the segments is, you know, what, what's, what are your best ideas? And my number one best idea for this year was gold. Because I think gold is now a real asset class. I think people are allocating to gold, not just the survivalists, you know, and the crazy speculators. Sure. People who are allocating real money because it's real value. And of course, gold's been the top performing asset for the year, certainly for the last 12 months. And so I, I think investors, I, I was at one point advocating 25% of a portfolio in gold-like things,

• 28:59Speaker 05

  real assets, high-quality land, gold, you know, high-value assets. I think that's too high right now because I think that, that trade has played out so very well. And gold seems to have stalled out in the last month or so at a very high level. So it's consolidating its gains. I think it goes higher. But for the time being, I'd probably be more like at 15% or something like that. And the rest, I think I, I would be in cash because I think valuations are just incredibly high. And the, the health of, of the equity market in the United States is, it's, it's among the least healthy in, in my entire career in terms of the P/E ratio, the CAPE ratio, all the classic valuation metrics are off the charts.

• 29:42Speaker 05

  And of course, the market is incredibly speculative. And speculative markets always go to insanely high levels. It happens every time. This is not, you know, obviously it happened in the dot-coms, it happened in the financials, part of the GFC. It's happening now in the AI and data centers and all that stuff. And you know, it's interesting, the, probably the, the biggest thing that changed the economy and the world in the last, I don't know, 150 years was electricity. Electricity being put into people's homes was probably one of the biggest changes of all time. And of course, around 1900, people realized that electricity to homes was coming.

• 30:23Speaker 05

  And so electricity stocks were in a huge mania and they did it incredibly well. But the, the relative performance of electricity relative to the entire stock market in the U.S. excluding electricity, so everything else but electricity, the electricity outperformance peaked in 1911. Houses weren't even broadly electrified by that. You had to be a very rich person to have electricity in 1911. But yet, that was the outperformance. And so, it all gets priced in very quickly and excessively. Because people love to look at the benefits of these transformative technologies. And they are transformative. I mean, look at what happened to some of the internet stocks.

• 31:08Speaker 05

  They dropped 80, 90% in the early 00s. But there are many, many multiples of what their peak was at that time. But it gets priced in very, very early. So I think that one has to be very careful about momentum investing during mania periods. And I feel like that's where we are right now. And I just don't think there's any argument against the fact that we're in a mania.

• 31:34Tracy Alloway?

  I want to go back to something you said just then about how investors should be reducing their dollar exposure. So this is, you know, the Sell America thesis that was very popular at the beginning of the year. And per your comments, is still very popular with some people. But we have seen, in general, you know, a little bit of a strengthening in the dollar. 10-year Treasury yields have been going down compared to where they were earlier. What accounts for, I guess, the stickiness of US assets in the global financial system and in investors' portfolios, even when, I think we can all agree, that there are challenges ahead for US government debt and assets in the form of high deficits and spending and maybe political stasis and things like that?

• 32:20Speaker 05

  Habit. People are reluctant to make changes to longstanding paradigms. One of the hardest things to do in the investment business is to significantly change your allocations after you've been right. That's counterintuitive to a lot of people. But trust me, someone that's done this for a very long time, that's the hardest thing to do. Because when you do something and it works really well, it gives you satisfaction on every level. An economic level, an emotional level, a psychological level. It helps you to have happy meetings with your clients. Just imagine if you bought Apple at, I don't know, $5 a share. And it went up to, I don't know, 700.

• 33:05Speaker 05

  And so you get to go to your review with your client and you say, "Let's take a look at your portfolio. Look at this. Cost five." Last price, 700. I am working for you, you know? I've done a good job for you. Well, when you sell Apple at 700, you no longer have that line item. And so you can't point to this great thing that you did for that client. And so people like to project the past, successes of the past. They like to hang on to them or even project them into the future. And that's a dangerous thing to do. But when you check, I was, I was 100% dollar. I owned no foreign currencies for decades. And then, starting about 18 months ago,

• 33:50Speaker 05

  I had to pull the trigger. I had to say, you know what? I, I don't think this paradigm is intact any longer. And I think you're going to lose money by betting on the dollar as a dominant asset. And it's a scary thing to do because you're, you, you, you wake up in the morning and you look in the mirror and say, I'm looking at a, at a strong dollar guy. And then all of a sudden, the next day, you're saying, I'm looking at a guy that's no longer confident in a strong dollar.

• 34:18Tracy Alloway?

  Pointing at the mirror going, who am I?

• 34:21Speaker 05

  Yeah, like, you know, I, I, I wonder why I have, should have to pay taxes, quite frankly. When I look in the mirror, I don't identify as a billionaire. I identify as a homeless 80-year-old guy. I, I, why should I have to pay taxes when I identify as a, as a destitute elderly man? I don't understand.

• 34:40Joe Weisenthal?

  Yeah, I think other people, other people might identify you differently. I want to go back to the rates question.

• 34:47Speaker 05

  Self-identification, is it?

• 34:49Joe Weisenthal?

  As you mentioned, it's sort of historically unusual that we've seen this period of the Fed cutting rates for the last 13 months and very little downward action in the long end of the curve. We know everyone can sort of look at the same math that you look at in terms of interest expense. We know that the long end of curve is very sensitive for housing and that's something that's very important to the U.S. economy. We know that President Trump would like to see the long end of the curve go down, perhaps because he has deep familiarity with it from his real estate days. Do you think at some point in the sort of medium-term future, we're going to see the return of proper yield curve control? That we're going to see the Fed cut rates

• 35:32Joe Weisenthal?

  and not get the response desired at the long end? And then more drastic action is going to come, such that actual steps are taken to suppress that long end?

• 35:43Speaker 05

  That's my base case, and I've been talking about this now for nearly two years, that we cannot afford the market to set interest rates if the deficit spending continues. It won't be tenable. So what has to happen is going to be some sort of drastic measures. And I'm not exactly sure what those drastic measures are going to be. There's a number of candidates for them. We could do what we did from after World War II until the mid 50s, when inflation was rising and we had significantly negative real yields. And we had inflation go up to around 8%, and the yield curve was kept, the long bonds were

• 36:25Speaker 05

  kept at 2.5%. So you can absolutely manipulate the yield curve. Japan did that for decades, for decades, they kept rates at zero, even though there was no demand. I actually had a meeting with the guy that ran the biggest pension plan in the world, it was one of the Japanese public pension plans, and I was really anxious to sit down with him. And I said, I really want to ask you this question. Do you actually own these negative yielding JGBs? And he actually laughed out loud when I asked him that question. He said, of course not. Nobody owns them except the Bank of Japan and the institutions that are forced to buy them by the Bank of Japan. So it's a real thing. We did it in the United States

• 37:06Speaker 05

  for a decade, they did it in Japan for decades. And Secretary Besant has alluded to the fact that maybe that's on the table, some sort of interest rate manipulation. So what this leads to is a really interesting dilemma, because what I think is my roadmap for the future, and of course, there's many variations that one could use, but the starting point for me is that interest rates will rise until such time as they're uncomfortably high for the Treasury Department. What is that, where is that? 5%, 6%? My guess is 6% is the highest. It would be full on Uncomfortable, full on at 6% on the long end.

• 37:49Speaker 05

  So what happens is you want to avoid long bonds while the market forces are in play. And Joel, you said that long rates aren't down very much since the Fed started cutting. No, no, they're up a lot. Long rates are up a lot since the Fed started cutting. This is the first time it's ever happened. They're up by almost 100 basis points with the Fed cutting. That's, it's never happened before. But with interest rates rising as the Fed is cutting at the long end, what's going to happen is they'll get to a point where all of a sudden it's too uncomfortable. And then something dramatic will happen. Something dramatic could that simply be the government, the Treasury Department buys the Treasuries.

• 38:30Speaker 05

  And if they announce that they're going to buy Treasuries and control long-term interest rates, you would have a 30-point rally in the long bond in a week. So there's a very, very sensitive strategy here where you have to be very negative over the normal course of things. And then once the intervention comes in, there's going to be a step, a significant step function lower in yields. And so you have to try to figure out how you're going to do that pivot. That's what I spend most of my time thinking about when it comes to the Treasury market these days. Although for now, it's way too early for them to panic and start manipulating the rates. What they might manipulate are mortgage rates.

• 39:12Speaker 05

  They could, they could absolutely buy Ginny Mays, Fannie Mays, Freddie Macs, the government guaranteed mortgages, and drive those yields down much closer to where Treasury yields are. And there's no rule that says they can't go through Treasury yields. I mean, there are instances where non-Treasury yields are lower than Treasury yields of the same maturity. Just earlier this year, there was a corporate bond that was lower yielding than the same maturity Treasury bond. That also happened in the early 80s when IBM bonds traded at a lower yield than Treasury bonds of the same maturity because investors had greater confidence in the payback of IBM than they did in what they thought was a bad strategy under Reaganomics.

• 39:54Speaker 05

  And that has begun to enter the picture here in 2025 with corporate bonds periodically, not only the very best ones, of course. But like Microsoft, something like that, trading through treasuries. And so that's a tell that something is up here. The other thing that they might do, and there was a white paper written about this just about a year ago now, that said, maybe we should restructure the treasuries held by foreigners, which is a very strange thing to say.

• 40:22Tracy Alloway?

  This is the Mar-a-Lago Accord, right?

• 40:25Speaker 05

  Yeah, yes, it is. I don't know how you define what a foreigner is. Foreigners can hide behind entities. Yeah. And so it looks like they're not owned by foreigners. So I'm not exactly sure what foreigners mean. But why put the word foreigners in there? Why not just say, we're going to restructure the treasury debt? Full stop. How, what does that mean? Well, one way to save on interest expense, to get it back down from 1.5 trillion to the 300 billion it was a couple of years ago, why don't you just say, all the treasuries that exist today, we're changing their coupons. The ones that have a coupon above one, the coupon is now one. The ones that have a coupon less than one, the coupon stays the same. That would save a tremendous amount of interest expense.

• 41:08Speaker 05

  Of course, it would cause a disastrous tumultuous time in the government bond market. But people say to me, you're always talking about this debt problem. What's the solution? The solution is get to a point where people won't lend the government money anymore, that the government can't borrow any money. So that if you, if you restructure treasuries that way, there'll be a couple of generations that government won't be able to borrow any money anymore. And that would actually put us in a better place than where we are today.

• 41:53Speaker 01

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• 44:09Tracy Alloway?

  I want to ask another question about private credit, but just before I do, I'm curious, do you ever talk to Bessend about your ideas for how to fix the US Treasury market, basically, or voice your concerns?

• 44:22Speaker 05

  I think he watches my CNBC segment after press conference.

• 44:28Tracy Alloway?

  All right, um, let's go back to private credit for a second because that's obviously the topic du jour. And as Joe pointed out, one of the things that has really grown exponentially over the past 10 years. You've said, you said on the podcast just now, and you've said it before, that you think private credit is the candidate for another financial crisis. And I understand the marking issue. I understand the liquidity mismatch. But when I look at private credit, maybe what's missing in terms of some of our more recent financial crises is that leverage built on top of leverage aspect. Can you give?

• 45:04Speaker 05

  Well, that's private credit. That is credit. It's leverage upon leverage.

• 45:09Tracy Alloway?

  Yeah, okay, explain that. Explain that because as far as I know, we're not seeing the scale of stuff getting rebundled as we saw, for instance, in the financial crisis.

• 45:19Speaker 05

  Well, that's true. You're not getting the rebundling, but you are having, there's a lot of leverage and the firms, they leverage, they're raising money and then they're borrowing money to buy more private credit. It's absolutely leverage upon leverage. And the other thing, while they're not bundling, like putting, you know, the thing about the gold financial crisis is you took triple B rated, and it's questionable whether they even deserved a triple B rated thing, and creating triple A rated securities out of them. I mean, just, just that, that alone should make you just, just, you know, just stop even thinking about investing in it. There's suddenly a triple A is turned into, a triple, triple B is turned into a triple

• 46:04Speaker 05

  A. But one thing they are doing is issuing public traded vehicles, daily NAV vehicles to allow. Main Street America, mom and pop investors, to avail themselves of this wonderful, fantastic opportunity of private credit, which is totally a liquidity mismatch. You've got daily NAV funds investing in things that don't trade at all. And so, once there's a run on those vehicles, and I don't know how popular they've been, but they've certainly been touted. But if they become popular in any way, you're going to have the catalyst for a tremendous selling deluge.

• 46:47Speaker 05

  Because there is no, people will want to redeem, and they won't be able to get their money out. And once you get that, once people, the trouble always comes in financial markets when people buy something they think is safe. It's sold to them as safe, but it's not safe. You buy a AAA rated subprime mortgage pool. You think it's safe because it's AAA rated, but it's not safe. It's extremely dangerous. You buy CDO equity. You buy CDO squared equity back before the global financial crisis. And there isn't any real equity. It's I buy your equity, you buy my equity. It's, we're all, it's just a game that's being played to make an illusion of liquidity. That's where private credit is right now. It's an illusion.

• 47:32Speaker 05

  They don't even claim it's liquidity. But if you package it into a publicly traded vehicle that trades on a daily basis, you have the perfect mismatch of no liquidity with a vehicle that promises liquidity. It looks like it's safe because you could sell it any day, but it's not safe because the price at which you sell it will be gapping lower. Gapping lower, island gapping lower, day after day after day. And so, that's where the risk rises. But these things go on forever. One of the things about the investment business is it's hard, it's difficult enough to be so-called right about the direction of things we're going. But it's impossible to be both right on the direction and correct on the timing.

• 48:15Speaker 05

  Things that if even if you're right on the direction, it's going to take a lot longer than you think. I turned negative on the packaged mortgage, non guaranteed mortgage market in 2004. It took three years for it to even start to decay. So these things take forever and it goes on much longer than you think. You know, remember, I turned negative on the NASDAQ maximum negative September 30th of 1999. I looked like a moron three months later because the NASDAQ went up 80% in the fourth quarter of 1999. But if you had gone short the NASDAQ, September 30th

• 48:54Speaker 05

  of 1999, 18 months later, you had a profit of 64%. Even though it went up 80% in the first three months, it dropped so much in the ensuing 15 months that the short would have made you a profit of a very handsome profit in a very difficult market.

• 49:13Tracy Alloway?

  Are you?

• 49:13Speaker 05

  Of course, you've been out of business.

• 49:15Tracy Alloway?

  Sorry.

• 49:15Speaker 05

  You've been out of business, you were making people's money.

• 49:19Tracy Alloway?

  Yes, slight problem there. But just very quickly, are you betting against private credit now?

• 49:25Speaker 05

  I have no way to do that.

• 49:27Tracy Alloway?

  Yeah.

• 49:27Speaker 05

  I don't really short bonds. Shorting high yielding bonds is a really difficult thing because the cost of carry is just brutal. Every day that it doesn't, it doesn't decline, you're paying out a very high, you know, rate. And so you're losing money all the time. So I don't really do that. What I do is I just don't allocate to it. I allocate to things that will do better, you know, that will be immune, relatively immune or fully immune from the knock on effects of deterioration in private credit. So that would, that would mean higher, you know, higher credit things, you know, using foreign currencies more than, more than typically.

• 50:10Speaker 05

  But no, I don't, I don't think you can really short private credit.

• 50:14Joe Weisenthal?

  What have you learned in your career about longevity and drawdowns or underperformance? Because as you mentioned, you can be right, or you can correctly identify a medium or long-term trend, but it sometimes takes a while to play out. Whether it's the case from September 99 to the peak, that's not actually that long. That was closer to six months. Or being bearish on some of the housing assets, starting in 2005, that took a little bit longer. How do you survive as a portfolio manager and be willing to take time where you're just, and accept that you're going to underperform for a while?

• 50:53Speaker 05

  Well, I have to have, think very carefully about your time horizon. When I started in this industry, one of the first things I was tasked to do was to do a study on what would happen if you had perfect foresight in financial markets, perfect foresight. And of course, you can do a study like that by using historical data. So you take stocks, bonds, real estate, commodities, every asset class, and you just look at the historical returns. And you can say, let's say at the beginning of every year, I invest with a five-year horizon, and I pick the asset class that I know with metaphysical certitude is going to have the highest return for those five years, because I'm looking at historical data.

• 51:38Speaker 05

  I came to the conclusion that if you had a five-year horizon, you would go out of business, even if with metaphysical certitude would have the highest performing asset class. And that's because so often, the first two years of the five years, that best performing asset class was not a good performer at all. It was very frequently back-end loaded. So I said, we cannot invest other people's money with a five-year horizon. I think that most people that invest other people's money use too short of a horizon, however. A lot of investment managers talk about they're constantly reallocating, they're constantly, you know, they have a little one-week horizon, a weekly meeting, and they change them. That's not going to work.

• 52:22Speaker 05

  It's not going to work because the chance of you being right in a week is very low. Even if you're going to be right for over a two-year period, your chance of being right in a week is very low. So I kept modulating time horizon, and I came to the conclusion that the sweet spot was between 18 months and two years for a time horizon. And what I've learned is that, having done that, I have a 70% hit rate. I've got a long enough career in enough strategies where it's statistically significant, and I have a 70% hit rate, which means I'm right 70% of the time, which means I'm wrong 30% of the time. So I've been at this for over 40 years, so I've been wrong for more than 12 years. Right?

• 53:06Speaker 05

  But thank God they haven't been in a row. Because what you can't do is, really, three years is when everyone pulls the plug. If you're wrong, if you underperform year one, year two, and year three, you're gone. You know, if you're wrong five years in a row, they shut your Janus Unconstrained Bond Fund, because you can't have sequential years of outperformance like that.

• 53:29Tracy Alloway?

  It's a very specific example, Jeff. I wonder where that came from.

• 53:33Speaker 05

  Well, yeah. So, but the, so really, it comes down to about having the sweet spot, not being overly, overly active, and not being overly, you know, fixated on your long-term idea. And I've managed to do that. I've never, I've never really had three years in a row of underperformance. So that's, that's been a good thing, and it's probably, I call myself, is it Uncas or Chenichgook, who's the last of the Mohicans, and John Fennmore Cooper? I'm the last one, I'm the last man standing. When I started in this, every single person of significance that's been in the business since I started my career, they're all retired or gone. I'm the last one standing.

• 54:17Speaker 05

  Dana Emery was the only one left, and she was at Dodge and Cox, but she retired at the end of June. So I'm Uncas, last of the Mohicans.

• 54:27Tracy Alloway?

  Jeff Gunkas? Does that work? Jeff Gunkas? Kind of. Very quickly, you know, again, we're sort of, we're very, we're being very introspective and retrospective on the show, but over the past 10 years, what's been the thing that surprised you most, either in terms of the markets or the financial industry itself?

• 54:52Speaker 05

  I think the thing that's surprising and as equally distressing as surprising is the magnitude of money printing that occurred in 2020, 2021, 2022. I just, the fact that the Federal Reserve broke the law and bought corporate bonds surprised me. It probably shouldn't have surprised me because they broke, they broke the law when they modified mortgages during the global financial crisis. That was, that was not allowed per the prospectuses of trillions of dollars of securities,

• 55:32Speaker 05

  but they did it anyway. And so what I've learned is that the rules can be changed.

• 55:38Joe Weisenthal?

  Yeah.

• 55:39Speaker 05

  In spite of the fact that they seem to be set in stone. And that's why I say, and when I say this, people really act very, in a shocked type of reaction. They don't believe that they can restructure the treasury debt. But yes, they can. They can restructure the treasury debt. And I think that that sort of has to happen in some fashion, whether it's the coupon adjustment that I talked about, whether it's, whether it's doing the yield curve control that Joel brought up earlier. I think something like that has got to happen because when something is impossible, and paying our interest back in today's buying power dollar is impossible to pay off our debt,

• 56:22Speaker 05

  it's impossible, then you have to open up your mind to a radical change in the rule system. And of course, that is happening on every level. I mean, you talk to, you look at surveys of people that are, say, 35 and younger, they don't believe in the institutions of this country at all.

• 56:39Joe Weisenthal?

  Yeah.

• 56:40Speaker 05

  They don't believe in the constitution, they don't believe in religion, they don't believe, they don't believe in anything. People need something to believe in, and that's what has to replace the system, a system that people can believe in. And what's being floated now just blows my mind. And that is that we're going to, because we have tariffs that are raising a few hundred billion dollars a year if they stay in place, well, that means that we should give $2,000 to everybody as a tariff dividend. We don't have any money. We're borrowing $2 trillion. We don't have $2,000 to throw away at people again. Didn't we learn that in 2020 to 2022, that giving money to people causes inflation? Remember people talking about modern monetary theory?

• 57:25Speaker 05

  What a joke. You know, you never hear anybody talking about that anymore because by modern monetary theory...

• 57:31Tracy Alloway?

  Yeah, Joe. How come no one talks about that anymore?

• 57:34Speaker 05

  Because inflation went to 9.1%.

• 57:37Joe Weisenthal?

  Can I ask one last question? Are you like, it seemed like, you know, you mentioned Trump floating the idea of a $2,000 tariff dividend to the public.

• 57:46Speaker 05

  It's a bribe.

• 57:47Joe Weisenthal?

  But do you like, are you, was there an opportunity in your view for Trump to have changed the status quo? Like, are you disappointed that someone with sort of Trump's persona energy, sort of perceived outsider status, did not do, has not done anything that actually changes some of, whether the fiscal or economic trajectory?

• 58:10Speaker 05

  He can't. The problem is, look at, look at this government shutdown. You know, what is going on here? Why, why do we have to pay taxes if the government is shut? Shouldn't taxes not be charged for 41 days? Shouldn't you have like an 11% tax rebate? Because what's going on? Well, it's just because there's this massive entrenched interest that is the, kind of the uniparty government that will fight tooth and nail. Just look at all the lawfare, look at, look at all the indictments, all this stuff. I mean, they'll do anything they can to hold on to power until such time as the people

• 58:55Speaker 05

  that vote these people in say, no mas, no more of this. And that began with Trump. It's been furthered just this month with Mamdani. Mount Dami won because people do not believe, it's a little bit different. Trump was more like the lower middle class. They felt that nobody was listening to them. Now it's just young people, just broadly. People under, I don't know, 35 years old, people that lost three years of education with lockdowns and all of these policies. They feel like they have no chance of ever having the life experience that the baby boomers had.

• 59:36Speaker 05

  Home prices are more affordable, less affordable than they've ever been. People have educations that are worth anything. Jobs aren't available. Nobody's hiring. They feel like there's no future for them that looks anything like what they look at Nancy Pelosi and Chuck Schumer and Mitch McConnell and all these other people had. They don't have it. And so they are not going to go along with this. And so that's why Mount Dami won. It's just like, I don't have a shot here in New York City as a young person. And that's what's taking over. And so Trump can't do it himself. He caught on to something that was obviously kind of hibernating within the psyche of part

• 1:00:19Speaker 05

  of the population, but it's now become a generational thing. I wouldn't be surprised, talk about another crazy gunlock idea. I would be surprised if they start putting in place an age tax. Not a wealth tax, which they're doing to a certain extent through electricity bills and stuff like that these days already, but you could put it together, an age tax, that if you're over age 55, you have a surtax based upon you had a better environment to accumulate wealth than the subsequent generations have. And so you should give some of that back. I think that might actually happen.

• 1:00:56Tracy Alloway?

  That would be a popular platform with certainly a specific demographic. Are you gonna run, Jeff?

• 1:01:01Speaker 05

  Absolutely, positively no. No chance.

• 1:01:05Tracy Alloway?

  All right.

• 1:01:06Speaker 05

  Absolutely no chance.

• 1:01:07Tracy Alloway?

  All right, we shall leave it there. Jeff, thank you so much for coming on Odd Lots, really appreciate it.

• 1:01:12Speaker 05

  Thanks for having me on. You're kind of all over the map today, but I hope your audience enjoyed it.

• 1:01:28Tracy Alloway?

  Clearly a lot to unpack there, Joe. One of the things, actually, this was towards the end, so that's why it's in my mind. But you know, when he was talking about the Fed buying corporate bonds in 2020, I really think that was an underappreciated moment in financial markets. Because I remember, again, we're being very introspective here. I remember writing pieces about the corporate bond market being problematic in like circa 2015.

• 1:01:53Joe Weisenthal?

  Yeah.

• 1:01:53Tracy Alloway?

  And I used to have commenters who were like, okay, so what's the worst case scenario? And the most extreme scenario that we used to talk about was, well, what if the Fed has to come in and buy corporate bonds? That was the extreme scenario. And that's what happened in 2020. So I kind of, I take his point about how quickly these things can change and you can deviate from norms.

• 1:02:14Joe Weisenthal?

  Totally. Remember, we interviewed Bill Gross on the beach a couple of years ago and he called out Jeff for like being the pretend bond king? Anyway, I liked Jeff returning the favor by pointing out the short-lived, the short-lived Janus Unconstrained Fund that Bill ran after having left PIMCO. So I see that the rivalry, the rivalry continues.

• 1:02:37Tracy Alloway?

  The rivalry continues. We should have them both on and just let them duke it out.

• 1:02:40Joe Weisenthal?

  Yeah, just let them duke it out, seriously. It's like, just do it. Yeah, just both come on. People would love that.

• 1:02:46Tracy Alloway?

  Oh, I'm sure, I'm sure. That would, whoa.

• 1:02:48Joe Weisenthal?

  Raise some money for charity or something like that. That'd be great.

• 1:02:50Tracy Alloway?

  Okay, Jeff, if you are still listening, and Bill, if you are listening, we should put pretend bond king in the headline and maybe lure him on.

• 1:02:59Joe Weisenthal?

  Yeah.

• 1:03:00Tracy Alloway?

  Open invitation to come on All Thoughts and debate. But on a serious note, more serious note, the other thing I was thinking about was when it comes to private credit.

• 1:03:09Joe Weisenthal?

  Yeah.

• 1:03:10Tracy Alloway?

  I thought the point about how everyone's been piling into private credit because it's outperformed public credit, that is changing now, you know, empirically, that has changed this year. But then secondly, everyone's been piling into private credit because of that low volatility pitch, which is one that we've heard a number of times on the podcast now, this idea that, well, you don't have to market to market, and that's actually a big strength. That sales pitch starts to lose a lot of power and conviction when you're going from 100 to 0 in the space of a month.

• 1:03:40Joe Weisenthal?

  I don't like how there are new ones like every day.

• 1:03:43Tracy Alloway?

  Yeah.

• 1:03:43Joe Weisenthal?

  Saying it's like each one of these little credit cockroaches are pretty small in the grand scheme of things. But two things, A, they're small and yet they seem to be touching a wide number of firms.

• 1:03:53Tracy Alloway?

  Mm hmm.

• 1:03:54Joe Weisenthal?

  Love. And I don't like how they keep popping up.

• 1:03:56Tracy Alloway?

  Right.

• 1:03:56Joe Weisenthal?

  I'm a little, I'm a little anxious.

• 1:03:58Tracy Alloway?

  Right. Cause you think the scale is small, but then it just keeps going.

• 1:04:02Joe Weisenthal?

  New stories.

• 1:04:02Tracy Alloway?

  Well, this is also why, why the cockroach analogy is so perfect. Right? Cause if you see one, you know, you have more than one.

• 1:04:09Joe Weisenthal?

  Yeah.

• 1:04:09Tracy Alloway?

  I once read an entire book about cockroaches.

• 1:04:11Joe Weisenthal?

  Yeah.

• 1:04:12Tracy Alloway?

  Just because I figured like know your enemy in New York. And it was actually really interesting.

• 1:04:17Joe Weisenthal?

  All right.

• 1:04:18Tracy Alloway?

  Shall we leave it there?

• 1:04:19Joe Weisenthal?

  Let's leave it there.

• 1:04:19Tracy Alloway?

  Okay. This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 1:04:26Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at the Stalwart. Follow our guest Jeffrey Gundlach. He's at Truth Gundlach. Follow our producers, Carmen Rodriguez, at Carmen Armin, Dashal Bennett, at Dashbot, and Kale Brooks, at Kale Brooks. For more Odd Lots content, go to Bloomberg.com/oddlots, where the daily newsletter and all of our episodes. And you can chat about all of these topics 24/7 in our Discord, discord.gg/oddlots.

• 1:04:51Tracy Alloway?

  And if you enjoy Odd Lots, if you want Jeff Gundlach and Bill Gross to duke it out on the podcast, then I should say proverbially, not literally. Then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

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