Jeffrey Gundlach: The yen is going down

published 22 March 2013

DoubleLine Capital's Jeffrey Gundlach, dubbed the "King of Bonds" by Barron's two years ago, seems to have impeccable timing.

Last July, he said US government bonds could be at a peak as yields were at historic lows. Yields have since drifted up to around 2% as prices have declined. In the meantime, Apple, a stock he had described as "over-believed and overbought", has fallen to around $450. He shorted it at $610 last year.

Moreover, earlier this month he said he reckoned that the rally in US stocks had gone too far. Equities are "obviously overbought in the short term". This week's Cyprus-induced wobbles duly followed.

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Gundlach now thinks that bonds look good value compared to other, traditionally riskier assets. "I bought more long-term Treasuries in the last month than I've bought in four years. I am a fan of Treasuries now."

He is also a fan of the so-called "Abe Trade". Japan's government seems absolutely determined to debase the currency and is explicitly saying it wants to inflate, he notes. The yen "is going down" to 100 to the greenback, and could reach 200. And the next stop for the Nikkei is 13,000.