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geoffery Gundlach he is the billionaire fund manager famously known as the bond King a double line Capital Yahoo Finance has managed recently to get an interview with the bond King where he has expressed his opinion about when the feds doing and has laid out his very gloomy outlook for the stock market in this video I'm going to summarize gun locks main arguments in the interview according to the bond King what we experienced in March of 2020 was far worse than the very worst day during the financial crisis of 2008 asset prices were in a freefall and there was a total cease up in the credit market system around the world due to the severity of this situation the Fed got desperate and went all the way into buying corporate bonds which is not allowed under the Federal Reserve Act of 1913 the bond King says that he expects the Fed to go even further in violation of the Federal Reserve Act in the next market crash geoffery Gundlach believes that the Fed is delaying the inevitable and simplifying the economy by allowing badly managed and and profitable companies to continue to exist furthermore the Fed is distorting the market by propping up asset prices and destroying the price discovery mechanism additionally the Fed has allowed government and corporate debt to grow to vary and sustainable levels thus the Fed currently has no choice but to implement a yield curve control and suppress interest rates for all bonds in a desperate attempt to save the situation and inflate the debt away jeffrey Gunlock believes that the US economy has been affected by covered 19 in a major way the unemployment rate has skyrocketed to a very high level and at some point it was as high as twenty percent a lot of jobs that have been lost will not come back and the unemployment rate will remain high for a long time according to the bond King we are going into a deflationary environment the US GDP will drop significantly in 2020 especially in the second quarter many companies will choose to downsize and many people will choose to leave the cities to live in the suburbs and the prices of real estate in major cities will decline significantly Jeffrey grant Locke said that many states are in big trouble because their tax revenue has completely collapsed and it's unlikely to improve anytime soon and so a lot of these states are going to be looking for more government bailouts according to Gunlock we are currently in a recession and the economy is going to feel the effects of net and it's very unlikely that we'll get back to our peak genomic growth even in 2021 thus a v-shaped recovery is highly and plausible the Bond King thinks that the stock market is currently going up because of fed money printing and government stimulus many people are taking their stimulus cheques and gambling on stocks and options in the Robin Hood accounts however corporate earnings have taken a tremendous hit and right now they are where they were back in 2016 when the stock market was 30% lower so the fundamentals are out of sync according to gun lock stocks are at risk from political uncertainty emanating from the next presidential elections furthermore the wealth gap will likely widen even more after the crisis which will lead to more social problems in the US additionally there is the risk that the US dollar starts to reverse into a significant downtrend because the value of the dollar versus other currencies is greatly affected by the growth in the u.s.
budget deficit thus the banking expects that we might see the dominance of the US stock market start to fade away
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