Transcripts For CNBC Fast Money Halftime Report 20160617

Will have the looming brexit vote on the hill, and other events to influence the outcome of where the major averages head from here. And steve weiss, the stocks had started to sell off a little bit into the program, and what are you making it, amid the bullard comments that it is a full capitulation . Yes, the second capitulation that we have had, and first yellen came out and had the press conference, and before in the fed note that came out with the meeting basically said, hold on. We are not ready. The economy is weakening and that put the market back on its heels after the jobs number of course that we saw. All bets are off. What is stark is that there is no playbook for anything that is happening. We have had jer areman 10year bunds at zero, and now back to two basis points, and the brexit is hanging over everything. So, as i said, no playbook, and no way to hedge the brexit whatsoever, because it is a true binary event, and if you are going to be taking the risk off and go negative in terms of hedging it, the market could explode higher. If you plan for the market to explode higher, and it goes lower, you could lose a lot of money, so you want to be in cash. And doc . What do you do offense or defense in a tumultuous week. Well, defense. I think that there is plenty of time for offense. I was trading the volatility of the etfs which worked out with well, because the volatility came back down dramatically and i was trading the inverse ones, but however, i think that over the weekend as some of the tumult dies down after ms. Cox was mirded yesterday horribly and after they have a little time to mourn, we will get focused in on the 23rd, and the 23rd, you will be able to the watch from gold volatility and the british pound. Those three are moving and moving in the wrong direction, and in other words, if the british pound is going down, judge, and volatility is going up, and the fwoeld is going up, then that means that the vote is tighter than people thought, and that is more of the risk for the Global Markets. And josh, it feels like it is somewhat risk off for sure until we figure out exactly what thursday is going to deliver, and that may not come until late in the evening. I dont know if i agree with that, because some of the polls are suggesting that a leave vote is more likely, looked more likely earlier in the week, and it seems to be fading a lit rl bit, but the back and forth in social media is going to be the back and forth and nothing we can do about it. But i think that we tend to rally into the big bad events when the looking at the history of the post crisis period is what always seems to happen. And looking at the the expectations of the Small Business optimism index, and philly manufacturing, and new hou housinging starts. And the Industrial Production was not better. All three of the major indices are down 1 this week. Yes, and nasdaq is the worst down 2 , and russell down 1. 5 point, and s p down a point and a half. And i have a feeling that the investor dont know what to do, like we are not sure what to do, and given, sarat, what to do . That is right. The fed doesnt want to take any conviction, and so it is so easy to be negative that you can throw it in the can, but longer term, things are going if be getter, and we will et get through brexit, and it is not tend of the world, things will happen later. And to sarats point, the eye of the storm is the twin banks, and interesting rates as well as the brexit vote. Eufn is the etf that tracks the european banks, and it had a bad week obviously, and closing down 1. 5 , but it is up 5. 3 from the lows in the middle part of this week. So, you know, if you are thinking about where is everyone the most freaked out, that is the area, and we are not finishing this week at the most n negative point. And i think that you are short term, and i will tell you why. I see a low return environment Going Forward this year, and next year, and the reason being that we are already extended on the valuation, and the valuation continues to creep up, and 20, 22 times, but if the brexit occurs, you will see the sterling drop, and the euro drop, and the u. S. Dollar strengthen, and that is 40 of the s p earnings and the multiple is going to be further extended and pressure of the u. S. Economy, and we have a 10year now back 160, and you will see that. And hang on. I one more point that we have the u. S. President ial election, and you tell me what the ceos are doing in front of that . Nothing. Unless it is not close. And i want to bring in Dave Albright, chief Investment Officer at new tfleet, and you e having to allocate all over the place, and what are you seeing in the environment, and what everybody was talking about . Yeah, with the brexit, we want to do a barbell approach to the invest it grade and the high yield, and be positioned to the either twha tway that the vote. And in the investment, i have done the duration of the 30year apple and the at t, and inbev and intel, and Lockheed Martin and we have barbelled that with structure trade of dell, and the banks. You are seeing a big opportunity in the fixed income . Absolutely. You have to go one way or another, and if it does, it creates opportunity, and if the not, you are going to create opportunity. And what is the embed return on that as you are looking at that. The curve is flattened with the longterm assets are very well sh well, and going from the 10year to the 30year. And apple buying 25 bips or 50 bips . In the 2 return change with apple. Low return and low investment value. And going into the safe names if you want to go into the safe names, it is going into gaminging, and boyd gaming and station casino, and the housing which we think is attractive and toll bro towle brothers and go in to marathon oil or concho, and barbell that in the 5 to 10 ran range. And do youle feel that somebody where the kind of money that you are over seeing with the investments that you are making that you can play, if you will, on an even level given that we dont know what the fed is either thinking or doing or we dont believe that even the fed knows what is it doing . Well, the fed is confused and they have pushed themselves into the corner, and they are talking about the net increase this years, and regardless, i am fully invested and the selection topdown and selection up, and we have liquidity, because i own the structure product that is high quality and when people say they provide the liquidity in the market, it is difficult unless you have incoming flows and coming in, i can do the high quality assets, and high quality ecs. And you are investing in what you are thinking in some part of what the fed is going to do, and the member s s of the fed are saying Different Things by the hour and if not day. So it is, you can believe 100 what you think for the moment, and then the potential decision might have to be changed by virtue of another fedhead coming out to Say Something different. Yes, and we listen to what the fed says, and basically, they are going to be doing one if they are lucky this year, and based on that the barbell approach with the risk and quality makes sense. I agree with you, and that is what i am talking about. The profile for return 2 to 5 or 6 is exactly what i u am looking at, singledigit. And what if the smartest thing is dropping the rate hike talk, and in other words, if they have tried the idea that it is coming, it is coming, and it is coming, and the jawboning and the psychological impact that it is supposed to have never materializes and what if it is smarter at this point to say, forget it. It is not something that we are worried about and no rush, and probably one this year, and maybe take the focus off of that so that everyone stops saying every week when the next raem of data coming out that the fed is trapped, the fed is trapped. And here we are with most of the focus on the fed, and almost every conversation that we have had, but there is less than a week to go whether Great Britain is going to vote to leave the eurozone, the socalled brexit vote. And so wilfred frost is here to tell us why it matters so much to the American Companies . Well, the opposition Jeremy Corbyn and Prime Minister David Cameron went to birstall for mourning mp jo cox. And they have recalled the Pa Parliament to come back into session monday. And so this brexit is making it very hard for it to come back to campaigning, because the vote remains thursday, but whatever the motivations of the murder of jo cox, the markets have bounced in the last 24 hours, and albeit in a better fashion than the odds might have suggested. The poll on 48 leave to 43 remain, and there is other polls that suggest 66 remain. So what does it mean for the uks economy . Earlier Christine Lagarde told cnbc the following. Sounds like we have lost that the bite. But Christine Lagarde saying that it would have a big impact on the uk economy. What does this mean for u. S. Companies which will be the most exposed, names like ford and ebay appear in the top ten of the uk revenues and their sales will be affected by any uk slowdown, and as well as a fall in sterling, but it is the banks most exposed, the u. S. Banks expose sure no emea and the chart of the top five, and Goldman Sachs has the highest x exposure at 27 , and these names are taking a big hit of the Brexit Delayed rate hikes and lower yields. Thank you, wilfred frost. We will see plenty of you next week. And now, if you could keep the comments brief, how are you thinking of the impacts on the investments that you are making . Well, i would say a technical bid for the u. S. Paper. If you went back four years ago, the Eu Investment grade and the domestic Investment Grade in the u. S. Had the same yield which is 3. 2 , and now the u. S. Is at 3 , and the e sushgs 0. 9 , and so there is such a technical demand of the Pension Funds and in europe that you have the backdrop of the added income. Appreciate your being here, Dave Albright with us today. Still ahead exclusive interview with Jeffrey Gundlach and the Interest Rates and how he is putting his firms 1 billion the work right now. And the war on viacom, and is there an end in sight . And we will have an explanation of why the Sumner Redstones latest move makes it a buy. And the apple stock under pressure after reports that the iphone 6 was banned in beijing. We will separate fact from fiction, and next, it is coming up on the Halftime Report. The economy is growing, with creative new business incentives, the lowest taxes in decades, and new infrastructure for a new generation attracting the talent and companies of tomorrow. Like in rochester, with worldclass botox. And in buffalo, where medicine meets the future. Let us help grow your companys tomorrow today at business. Ny. Gov [phone buzzing] some things are simply impossible to ignore. The strikingly designed lexus nx turbo and hybrid. The suv that dares to go beyond utility. This is the pursuit of perfection. They found out whos been who . Cking into our network. Guess. I dont know, some kids in a basement . You watch too many movies. Who . A Small Business in china. A business . They work nine to five. They take lunch hours. Like a job . Like a job. We tracked them. How did we do that . We have some new guys defending our network. New guys . Well, theyre not that new. Theyve been defending things for a long time. [ digital typewriting ] its not just security. Its defense. Bae systems. Back on the Halftime Report, and what a day for the shares of apple trading on the heavy volume on the reports that the company was forced to stop selling the 6. 0 and the 6. 0 plus in beijing, and that is quickly shot down with josh lipton who has more. Wild story this morning and reaction, josh. Well, scott, china halts apple iphone 6. 0 sales is the headline that got the investors nervous this morning, and then apple clarifying what this news means telling me that iphone 6 and 6 plus as well as iphone 6s and 6s plus, and iphone se models are available for sale today in china. We appealed an administrative order from an original patent tribunal in beijing last month, and as a result, the order has been stayed and pending review by the beijing ig court, and the reports are accurate that the last month a court did rule in china that apple did infringe on the local companys patents, and apel is fighting the order, and while it does, all of the products are for sale in china, and no disruption, the company is telling me to business there. And still, the report did send the apple stock lower and it is in the red, and apple stock down 10 , and down nearly 25 in the past 12 months, and we know that beyond the case, the tech giant has been dealing with near term pressures in china, and the regulators are suspending the books and the movie business, and in last earnings report, apple said that revenue in Mainland China dropped 11 , and specifi specifically with this case, the analysts dont seem too worried, and reports that if it does happen, it is only going to impact sales of apple in beijing city itself, and so it is not going to be an impact of the margins of revenue in china as a whole for apple. But josh, it does raise interesting questions of what could happen next, and it is not like beijing is insignificant mark marketplace with just a few people running around. No, it is absolutely true. You had the order from what i understand, and apple is fighting the order, and now it is going to move through the court system there. I think that the important point there is that as it moves the sales right now, and not disrupted, we will see what comes ahead, scott. Josh lipton, thank you so much. And guys, what do you make of this . One of the principle reasons that carl icahn told me that he got out of apple was for these types of concerns. Apple or china messing with the u. S. Companies in the way that they do business. Scott, we are have seen the story before with qualcomm, and what china did to qualcomm and how many years it has taken them to come back, and korea does the same thing, south korea, and it is careful because you cant say just beijing, and you have to extrapolate, and if the chinese want pressure on apple, they will do it for a long time, and you have to be very, very careful. And it is like, judge, if you see a line outside of the apple store or the movie theater, and people are interested in going in there and in this case having the phone perhaps cut off for moments in time got right back to sales and so forth, and having people worry that, oh, i might not be able to get this thing could end up having the opposite effect in the short term is that people rush to get it for fear that it might be blocked after this tribunal makes the ruling. So just as a trade i bought some just before the show started today. Bought some apple . Yes. Stock . Yes. And tim cook may want to the talk to bob yiger about how to o business in china. You contrast what is going on today with the apple news, and maybe it is not really news with what has come out about the concession concessions that disney had to give china. Well, it is news, and be clear, this is not a made up story, and it is news. Well, maybe it is news, but not huge news, but it is meaningful to the sentiment, and whether it is meaningful to the next quarter, and it goes to sentiment, and the stock has been down since christmas, and china is one of the things when you are talking about apple in 2014 2015 upside catalyst, and now it is potential downside catalyst, and what is the next shoe to drop . But the analysts saying, hey, it is not going to be impacting what they earned in this quarter so if you are an investor in the stock, it is the same thing, and this thing is in the nomansland. And it is terribly important, and any company there with china has had a trouble with the intellectual property whether it is apple or the automotive companies. And now, to concede the parks of disney to do business there, and maybe they dont want to talk to iger about it, because he is doing it because of the sales of the product, so look, it is more to come, and it is very difficult, and by the way, they are also having problems with india in putting up stores. And the mere fact that we are having this conversation better to have china as your partner and cede some control over the operations or do what google said and decide not to be there at all. It is better to be there and also to moderate the mobile that you attach it in the growth a aspects of it. And josh is right, you have to partner with them, and wow wont get any Business Done if you dont partner with them. And dont listen to the rbc analysts, it is only beijing. And beijing and the 6 s, you know. And has the fed lost credibility, and are any rate hikes still on the table this year . 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Contact your health plan for the latest information. Now it is time for the blitz and four trades on four stocks making news today led by oracle, and beating the revenue estimates, and what are you making of this one, sarat . Doing well with the cloud and good run from here. And josh, cautious with the cloud, Google Alphabet this is. Yes, they said they looked at it two of three quarters and they kept the buy rating on the stock, and kept the target at 900, and the stock has support of 680 and 685 and that is re reresistance and now this is not that negative of a note. And now, lifelock and activists against them . Yes, and they are phenomenal fe investors and i have looked at the track record and it is lights out, and tremendous, and they are one of the best out there, and you dont want to go against them, and i would think that the board would be wise to listen to them, because they can enhance the shareable value and make their investors money. And doc, the guidance of smith and wesson . Well, the guidance came in, but then cowen and gundlach or others reiterated to take them to buys, and the stock is off of the target at 22 to 28. And he has called the stock dead money, and says that the sen tral bank is losing control. The always outspoken Jeffrey Gundlach of doubleline is going to weigh in on brexit and where we go from here. And viacom, and that is a soap opera, and why there is a reason to be bullish after being on the sidelines since 2012, and wow, he going to join us on what changed his mind next. Welcome back to the Halftime Report, and to sue herera who has the latest headlines, sue. And this is what is happening in Santa Barbara county, and a wildfire that has doubled in size and now close to 40 acres according to the officials. Dry winds and conditions are fanning the flames. And Vladimir Putin reaffirmed the view that the president ial nominee donald trump is a bright person and promises to turn a new page with the relations of russia, and putin saying that russia is willing to work constructive with whomever wins the u. S. Election. And iran is reporting that an explosion in a subway tunnel has killed two workers and damaged a pipeline, and that also damaged phone cables and waterline waterlines. And steph curry and coach steve kerr were both fined 25,000 as the frustrations boiled over in the game six loss to the cleveland cavaliers. And curry was fined for throwing the mouthpiece into the stands for fouling out of the game, and kerr criticizing the fouls on curry. Tensions are indeed high. And that is the tensions on this hour. And sue, thank you so much. And the soap opera that is twisting and turning and the company cutting the reports as redstone is calling for more calls to remove ceo Philippe Dauman, and then he upgraded the guidance right after this. And thanks for having us, scott. This is a fascinating situation. And yes, this is moments after the board up heel, you put a buy on the stock for the first time in a couple of years and why . We have been waiting for clear and decisive action, and that is what we are getting now, and really, Philippe Dauman cannot win, and the current board cannot win. Whether or not the lawsuits in massachusetts or even now the one filed in delaware prove successful, the reality is that the Sumner Redstone trust which controls National Amusement that if he is incapacitated the vote is going to go to same way, and whether Philippe Dauman and viacom wins the lawsuit, it is going to end the same thing, the board and the Management Team are getting fired like it or not. And for argument sake that mr. Dauman remains the ceo, and in question as to whether he is going to be staying in that job. And if in fact, he does for longer than you think, did you jump the gun with the buy rating . You know, look, we are making a very strong guesstimate of what going to happen next, and timing is important, and we have put that in the report that though it could drag the on longer than we think, and it is feeling like it is moving in a rapid pace, and i dont believe that over the next six months we wont see closure to this and you can tell by the investors of the movement of the stock over to the last 24 hours tls, therea lot of pentup desire to buy viacom and not just from the management change, but the merge wer cbs, because there is a twostep process, and one is to get rid of the current Management Team and board and the second is the catalyst to put the two Companies Back together that never should have been separated and you will create a lot of value for the shareholders of vie xwra viacom by reuniting with cbs. And who to replace dauman . Les moonvez, and viacom has lost the mojo over the last decade under dauman, and they need somebody who talent truss,s and so a start is putting les in charge, and though, there has to be somebody in charge of the specific viacom and paramount assets, yes, and fresh blood is needed, but les is the obvious choice and protecting viacom, and allows the creatives to return which is the real catalyst for the viacom stock to move for the target. And it is interesting, but you can put hump ti dumb hu ti dump ti back together again, but is it worth it . Yes, and this is the what is explaining what is happening here, and we are negative in the media space, and accelerating on disney and the fundamental universal Cable Networks is s w showing the signs of cracks, and how in the world do you get comfortable buying viacom, and the investors are expecting them to be dropped and mean iing the Cable Systems and the satellite systems and they expect viacom to be a loser, and quote, unquote loser network and get hammered hard over the next few years by putting it back together with cbs, you will create a shield around viacom which makes it harder to be dropped and just the way that cnbc would have a hard time being dropped, because it is the protection of the Cnbc Television network behind it, and disney and espn and free form television, and so that shielding is is the reason why viacom shareholder s are gs areo be benefitting with a recombination of cbs. And what happens with paramount, and viecoacomviacom, should happen . Well, judging how poorly viacom is run, and that is one thing with the earnings are preannounced look at how horrible viacom, and paramount is doing, and yet the ceo was promoted just a few months ago to chairman and on top of that, the third highest paid ceo according to New York Times in the country at 54 million and the board even acknowledged that there is problems and disappointed in the viacoms performance, but the reality is is that paramount and viacom is performing so disappointed that the board should have taken action regardless of sumner, and that is what is disappointing is that the board sat idly buy. So you dont sell it, but improve it under les and look at the options, but you dont sell a minority stake, but if anything, you sell all of it and then try to fix it before you sell it, because it is run so poorly. And let me ask you, because tom freston was on the network a couple of times this week. And yes, amazing, and one of the best interviews i have ever seen. Appreciate you saying that, and he was asked the question of whether he would like to return, and in a xas as ceo or perhaps even otherwise, and i know that you are suggestion is for viacom to be put together with cbs and les moonves to run the show, but should freston come back and could he run the company now . I think that tom is having the time of his life making the world a better place, and the last thing he wants to do is to go back into the daytoday corporate shuffle, but there are several other executives logically left, but there are other executives that are more suited and frankly, just younger. The reality is that in many ways whoever is put daytoday in charge of mtv and they need an infusion of the youth, and the one thing that they have lost touch with is the connection to the millennial generation. Rich, i appreciate your joining us, and i know that my friends at five appreciate the shoutout on the interview. Thank you. And rich greenfield at btig. And he is assumed that les moonves would want it, but dont know why, because they have subpar properties including mtv which nobody cares about, and declining sales, and it is a cheer when the sales only decline 4 on the street. And so i dont know if they put it back together, and frankly, im just not a buyer. I used to own the stockton belief that it would trade at 2 to 3 times ebida, and paramount is only partially sold. It is not enough. Very few Media Properties with any connection to the millennial generation, and it is a non sequitur to talk about mtv and millennials in the same sentence, because they are on apps and not on the web any more, and so it is difficult to have a big cable property to reach them there and somebody is going to figure it out, but it is not this guy. And Jeffrey Gundlach on the record and live and exclusive today and what are his thoughts on the brexit, and Janet Yellens next move and the markets . He will tell you when we come back. 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Well, one Startup Airline is doing to stand out in the airline crowd. All off that and more on the Halftime Report, and coming back after this quick break. Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 59. 95 a month. Comcast business. Built for business. We are back on the Halftime Report and we mentioned at the top of the program, the st. Louis fed president James Bullard said that the rate hikes would be necessary over the next 2 1 2 years, and it was stunning reversal and raising to questions if the fed has lost their credibility. And Jeffrey Gundlach has suggested as much of doubleline capita capital, and he is joining us, exclusively by phone. And good to have you back. Yes, six months to the day since we have been together. Well, welcome back, and talk bullard first, and over one rate hike over the next two year, and he says that the outlook of the economy is uncertain. And what is your reaction to what he said . Well, im not sure about the 2 1 2 year predictions when the fed has been changing their opinion every oe other week, but he is coming around to the reality as the fed is broadly speaking. One thing that i have been talk about for quite a while now is just how stable the gdp has been on both the real and the nominal basis, and we keep for years had predictions that the real gdp would come in at 3 as a hope, and maybe 18 months forward and it is coming in 2 plus or minus something, and the fed has now given up on this idea that somehow we are going to be ratcheting up to the 3 real growth pattern and you can see it from the s p report that came out on wednesday that they basically just say that, gdp is going to be 2 this year, and 2 next year and 2 the next year and 2 in the long run and not so much a forecast as a recognition of the reality, and that is where it has been for six or seven years, and so that the fed, you mentioned losing credibility, i think that they gained a little bit of credibility, ael though confused this week, by at least acknowledging reality. And do you believe that the fed has a good handle on where this economy is today and where it is heading . I dont think that the central bankers around the world fully understand what the consequence consequences of their policies, and you know, one of the charts that used to be popular, and it is still worth looking at is the chart of the s p 500 over laid on the size of the fed Balance Sheet and it is uncanny how the s p 500 rallied when they were doing the qe and balancing the sheet, and how it never goes anywhere when they stop expanding. When they stop expanding the Balance Sheet, and they stopped qe3 in september of 2014 and the s p 500 and the Dow Jones Industrial average and the nasdaq are all exactly the same as they were when they stopped the expanding Balance Sheet. So the fed not expanding the Balance Sheet makes what i have been talking about the s p 500 as dead money, and it has been dead money with no price change for 18 months, but what is going on overseas is what is really out of control, and that is where they dont understand that negative Interest Rate policies do not inflate their stock market markets and that negative rate Interest Rates do not improve grow growth, and it does not weaken currencies, and if you are looking at what happened in europe since they went negative. The stock market, the dax is down 20 , and the euro is up in the high single digits, so if you are looking over to japan, since they went negative in january of this year, the nikkei is down 10 , and the yen is up 10 . You see, negative Interest Rate ares do not cause the outcomes that central bankers think that they do, but they dont understand it yet. Is that why you have said, and i quote, Central Banks are losing control. Yes, because qe in the United States is to broadly look at stimulating the asset prices, and the stock market went up, but they are out of ocontrol, because the policies they are implementing dont have the consequences that they are looking for. They have the opposite consequences. And the reason is that by going to negative Interest Rates, you do not stimulate consumption, but you stimulate savings, and if you are looking at countries in europe, and the deposit rate as they have declined the Savings Rates are up systematically as the rates are negative systematically, and that is understandable, and think about somebody who is watching this program, judge, who is 60 years old, and thinking that maybe they want to retire in ten years at age 70, and maybe by the old school thinking they say, hey, i need to save 11 million, and if i will get the old school Interest Rates of 5 , i will get 50,000 off of that and together with the Social Security and i will be be okay, but now if you are starting to get the confidence of bullard is now forecasting, that Interest Rates may stay at rock bottom levels at zero for that time period, you dont need to save 1 million, but you need to save 2 million, and if you think that you were going to live another 20 years age 50 to 70, you are going to be living on 50,000 from those 20 years, so you dont need to save 1 million to 90, but 2 million, so no surprise, that when you go to negative Interest Rates you are not stimulating consumption, but fighting savings. And you cannot flight inflation with deflation. And negative Interest Rates is deflation. And if you a 40 basis yield on a fiveyear note, you invest today, you will only have 5 on the interest. So that is deflation, and you cannot put out the fire by pouring on the gasoline on it. And go ahead and finish the thought. The next thing is that the central bankers are going to be coming to the conclusion that negative Interest Rates are a great thing and they are a great thing but they havent done enough of it. We will get another round of negative Interest Rates and the same thing is going to happen. Youre going to get stronger currencies, weaker markets in those place where is theyre doing that, and then finally i think theyll say, ah, this doesnt seem to be working. Maybe we need fiscal stimulus, and when that comes, then thats when the game will change. Let me ask you this, how many times do you think the fed will raise rates this year and how many times do you think they should . Well, as you know, judge, back in december i said theyre going to raise rates today but its a mistake and, of course, the Global Markets crashed when they raised rates in december. I dont think they should raise rates at all and frankly, i dont think the data is encouraging them to raise rates. Obviously they did a massive psychological shift on wednesday. I dont think theyre going to raise rates at all this year. Wow. Jeffrey, stand by for me. Were going to take a quick break. On the other side come back and talk to you on more market reaction. More with jech Jeffrey Gundlach of Doubleline Capital after this quick break. Ffrey gundlach of Doubleline Capital after this quick break. Andrea sikon. Medical doctor from cleveland clinic, watson, lets review the Electronic Medical record of the next patient. No problem. Its a pretty huge file. Done. Sorry for the wait. That was quick. 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But with their Raymond James financial advisor, they had prepared for even the unthinkable. And they danced. See what a Raymond James advisor can do for you. Were back with Jeffrey Gundlach rejoining us. Jeffrey, are you right there . Im right here. You said months ago the stock market was, quote, whistles past the graveyard, it was ignoring many of the big issues out there. How do you feel about it today . That was back in december i said that and clearly the market got in sync on the downside with what i was talking about. Right now im looking at i think were going to have a rough summer with the Global Growth scare and i think one of the variables for the Global Growth scare has been removed thankfully and that was the fed who was itching to raise Interest Rates but i think donald trump is doing to move ahead in the polls, and i have been saying that all year, and people laughed at me earlier this year when i said he was a legitimate candidate but now hes the presumptive nominee and i think he will move ahead in the polls and when he does, i think the initial reaction will be a big blowback from the establishment media that doesnt want him to win and theyve already started to publish a lot of scare articles about Global Economic problems and, you know, protectionism and tariffs and the like and i think that will get people nervous as if theyre not nervous enough already with whats going on with the british situation, and so i think we could see a selloff this summer with a seasonally weak period with Global Growth scare, but i actually think that things are going to get pretty scary, and i think its going to present quite a good buying opportunity because i think when donald trump is inaugurated, i think hes going to initiate a very large deficit spending program, which is probably not very prudent from a structural point of view if you look forward a decade, but it always has the appearance of, quote, unquote, working when it starts happening. Lets just be hyperbolic about it. Lets say by building roads and airports and walls, that we end up creating enough jobs and we expand the deficit by a half a trillion dollars. I mean, that would bump up gdp growth by 2. 5 all things being equal. Are you a supporter of mr. Trump . Im apolitical. I dont really support or endorse candidates, but i just have perceived that i think hes much more credible than people think, and i think that we live in a world where clearly look whats happening in britain versus europe. You know, its just people arent getting along. Theyre not happy because of the technology taking jobs and sort of this long, slow grind of a new economy, and so theyre looking for change, and i think trump is going to win on the basis of that, and he will be quite a bit like Ronald Reagan i think. I have gone so far as to call him ronald trump because, you know, Ronald Reagan campaigns slogan in 1980 was lets make America Great again. People dont even remember that. But theres a lot of similarities. So im not supporting or going against. Im just observing that i think its going to happen, and i think trump is bonds negative and stock positive, and i think hillary if she would win would be the opposite. Interesting. You mentioned whats happening over in britain. The brexit looms. The vote next week could have a big indication on where all markets go in the days and weeks following. How do you think that is going to shake out . Well, i have been absolutely steadfast in predicting brexit is not going to happen. I call it bremain. Bremain is going to happen. I think todays markets are reflecting an increasing belief in that. I think as a trade its risky. But i think as a trade youre supposed to buy the european banks, as much as people hate them. It makes me think maybe theyre sold out and when bremain happens, we got a pretty big pop last night, but still theyre low, and i think as a trade i think thats a reasonable thing to do. I just believe that when these things i have observed these type of things before. Scotland went through the same thing a couple years ago. When they pull about even going into the election, its almost certain that the leave vote fails because people love to complain. They complain about the company they work for, campaign about the their boss, but when push comes to shove, if youre an undecided person, you think what actually is going to happen if i pull the leave bouton . The devil you know is the devil you dont know. So i actually think i have been saying that theres no need to prepare for brexit because its not going to happen. At this point since it surged not surprisingly in the polls because people love to complain and that reaching its apogee about a eke week or two weeks be the election, im not surprised it surged in the polls but its created something of a buying opportunity because i simply dont believe brexit is going to happen. I can see people looking at the trading screen and fingers on the buy button of a Deutsche Bank or Credit Suisse or another stock thats down 70 80 or some percentage more than that. The best trade fingers shaking on that trigger. The best trades i have ever done. Theres two characteristics. One is your hand is literally shaking while you write the buy ticket and number two, the cover, the send best bid away, the person that missed when you won, is very wide. A lot of people get nervous when, you know, they pay 20 for something and the closest bid is 18, but, frankly, thats usually when youre going to make the most money is when the cover is the widest. So i think the conditions for, you know, a bounceback im not talking about a fundamental investment here. Im talking about a trade. I think the conditions are in place. Let me ask you quickly before we run, weve talked about where you think stocks will go and sort of the overall market reaction. Were looking at a tenyear today that is about at 1. 6 give or take. Yeah. Where or how low in your scenario do you think the tenyear yield goes . I dont think it goes much lower than where it is right now. If its supposed to go lower on the fed being more cautious about raising Interest Rates, how come its not changed one bit since tuesday, since the announcement in the press conference on wednesday . So i dont think its going much lower. Also, one thing i observed for the past couple years is rhetoric about the fed has heated up, that they were going to raise Interest Rates, thats whats made long bonds rally. The long bond wants the fed to cause a depression. If you want to buy a tenyear at 1. 60 sor a long bond at 2. 40, you want there to be zero inflation or negative inflation. The long bond says, go ahead, fed, make my day. Go and raise rates. So theyre not raising rates and i actually think theres less downward pressure on longterm Interest Rates because they basically act inversely to the attitude about the fed raising rates, so i dont think the tenyears will go much lower. I said in july of 2012, i said this is the low rate at 1. 38 on the tenyear. I think that will remain as the low on the tenyear. Its possible something bad happens in the world and theres a massive flight to quality, never rule that out, but my baseline is we saw the bottom in rates of 2012. Jeffrey i have to leave it there. Thank you for calling in today. Good to speak to you again. My pleasure. Talk to you soon. That does it for