Jeff Gundlach: This Time it’s Different and Today’s Other Top Stories

There can only be one bond king. And with Gross vacating his throne at Pimco, that means that the undisputed fixed income crown, goes to the one and only Jeff Gundlach.

For most of this year, Gundlach has nailed what would happen with interest rates and the U.S. dollar. But now he’s turning his attention to 2015.

In a new presentation titled, “This Time It’s Different,” Gundlach outlines what he believes may be the best investment strategies and sector allocations as well as the challenges he sees facing the Federal Reserve and the global economy.

Gundlach also highlighted some of the complications that the crash in oil prices could pose for the global economy.

Gundlach left us with these words of wisdom: “It’s always different,” Gundlach said. “The one thing that is constant in the world of investing is change… Things are always changing.”

You can go through all 60 of Gundlach’s slides here, to get a better idea what he’s talking about.


Todays Other Top Stories

Learn Bonds

Learn Bonds: – Duration – The bond statistic you need to understand. – Many investors look at bonds in very simplistic fashion. If the obligation generates enough yield and is from a familiar issuer, it may be a no brainer buy for many. For the more discriminating bond investor, a number of data points will enter into the picture: yield, maturity, credit profile, call protection, forward outlook for the issuer — just to name a few.


Municipal Bonds

Bloomberg: – High-yield munis beat Iraq for Rich Bernstein. – High-yield municipal bonds are a worthwhile investment because they offer greater rewards than even Iraqi government debt, according to Richard Bernstein, who runs a money-management firm bearing his name.

The Bond Buyer: – Sen. Coburn: Eliminate the muni tax exemption.  Congress should eliminate the tax exemption for municipal bonds, Sen. Tom Coburn said in a report released on Tuesday.

SIFMA: – Muni markets: Let the sun shine in. – Regulation may be able to enhance the way the muni market trades, but it cannot create a minute-by-minute two-sided market for the simple reason that most bond-owners don’t care to sell their bonds.


Bond Market

Investing.com: – Will the bond bull market ever end? – Will the “bond bull” market eventually come to an end?  Yes, eventually. However, the catalysts needed to create the type of economic growth required to drive interest rates substantially higher, as we saw previous to the 1960-70’s, are simply not available today.

See it Market: – The bond market blues: In 3 charts. – The warning signs coming from the bond market are getting louder and louder as investors received a fresh red flag signal last week.


Treasury Bonds

Chicago Tribune: – Treasury bond rally sends yields lower. – Treasuries rose Tuesday, pushing 30-year bond yields to a seven-week low, as Chinese efforts to tighten lending rules and a renewal of political instability in Greece spurred demand for the haven of U.S. government debt.


Investment Grade Bonds

Bloomberg: – Bank of Canada warns of liquidity risk in corporate bonds. – Canadian corporate bond investors may be underestimating the difficulty of selling their holdings in a market downturn, leaving them open to greater losses, the Bank of Canada said.


High Yield Bonds

FT Alphaville: – Disaggregating high-yield returns by sector. – (Subscription) 2014 has been a disappointing year for high-yield. That’s pretty remarkable considering that sovereign interest rates have plunged over the past 12 months. Why? The oil price collapsed. But what happens when you remove high-yield energy bonds, how did junk perform then?

S&P Capital IQ: – High yield bond prices hit 3-year low in trading as energy woes continue. – The average bid of high-yield bond flow-name bonds in the U.S. secondary market dropped 178 bps in today’s reading, to 96.18%, yielding 8.64%, from 97.97, yielding 7.87%, on Dec. 4, according to LCD. The observation is the biggest leg down since the Oct. 14 reading, and it represents a three-year low for the average.

Forbes: – Reaching for yield. – In the income-starved world of Fed rate suppression, investors, especially those in retirement, suffer illusions about what income they are getting. They are easy prey for Wall Street hustlers who feed those illusions. The principle at work here is captured in an old brokers’ slogan: “If the ducks quack, feed ‘em.” Protect yourself. Understand these ten ways that yields can be deceiving.

The Street: – Great values in high-yield bonds. – Energy-related bonds are getting crushed. The average dollar price of junk-rated energy bonds is now $89.8. This has dragged down high-yield bonds in general, partially because energy is the largest sector within most high-yield indices, but also because of worries about what the precipitous drop in oil prices means for global growth. If you can afford to be selective, you can find some great value in high-yield bonds today.


Emerging Markets

Bloomberg: – AAA-or-nothing ruling adds to China bond default concern. – With $90 billion of bonds sold by local government financing vehicles coming due next year, China is walking a fine line between teaching investors a lesson and preventing widespread defaults.

Morningstar: – Don’t make emerging markets your investing blind spot. – Performance and diversification properties make them good supporting players for most portfolios.


Investment Strategy

Morningstar: – Don’t overlook the risks of individual bonds. – High transaction costs, lack of flexibility, and credit-quality risk loom large.

Morningstar: – 4 Key questions to ask when investing in bonds. – Think through all of the variables when developing your fixed-income portfolio.

Morningstar: – Our picks for fixed-income investors. – Morningstar analysts have sorted out the best bond funds to balance out your portfolio.

Investorplace: – 3 high-yield REIT plays to buy into. – We’re seeing several high-yield themes working well and that would be lending to small- to medium-sized businesses; that would be owning debt in the corporate market; that would be looking for distressed credits out there, where balance sheets are under repair still, those are doing well.


Bond Funds

Morningstar: – ETFs are not always cheaper. – On an asset-weighted basis, institutional mutual fund share classes are lower than ETFs’ in all but one Morningstar Category, largely due to the Vanguard effect.

Morningstar: – Bond-fund basics. – Consider these key factors before you go bond-fund shopping.


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