FILE PHOTO: Jeffrey Gundlach, CEO of DoubleLine Capital, speaks during the Sohn Investment Conference in New York City, U.S., May 8, 2017. REUTERS/Brendan McDermid/File Photo
NEW YORK (Reuters) – Jeffrey Gundlach, chief executive of DoubleLine Capital, on Monday said the S&P 500 Index is headed to new lows and that U.S. equities are in a long-term bear market.
Gundlach, speaking on CNBC TV, said passive investing has reached “mania status” and will exacerbate market problems.
“I think it is a bear market. I think we’ve had the first leg down and the second leg down is usually more painful than the first leg down,” said Gundlach, who oversees more than $123 billion.
“I think this lasts a long time. It has a lot to do with the fact that I believe that we’re in a situation that is… highly unusual – that we’re increasing the budget deficit so spectacularly so late in the cycle while the Fed is hiking interest rates.”
The intraday low for the year in the S&P was on Feb. 9, when it bottomed at 2532.69. The low close for the year was on April 2 at 2581.88. On Monday, the S&P was trading around 2572.
Reporting by Trevor Hunnicutt and Jennifer Ablan; Editing by Dan Grebler