“Highway to Hell”

“Bond King” and DoubleLine founder Jeffrey Gundlach hosted a webcast called “Highway to Hell” on March 12. The title highlights the condition the US economy (SPY) could find itself in if policymakers don’t do anything to control the growing federal deficit.

Gundlach has been quite vocal about the impending risks of excess leverage in the system.

Gundlach Thinks Trump Is to Blame for Shocking US Debt Growth

Budget deficit

In the webcast, Gundlach talked about how part of the budget has been increasingly set aside as off-budget to lessen the apparent impact of deficits. He also pointed out that right now, the United States is experiencing 3.0% real economic growth, 5.3% nominal economic growth, and a 3.8% unemployment rate, but the country still has a budget deficit that’s similar to recessionary times.

The 2018 federal deficit increased by $1.47 trillion, ~7% of the official GDP. Nominal GDP, on the other hand, increased 5.3%. Gundlach argued that simplistically speaking, if the United States hadn’t seen an increase in the deficit, its economy probably wouldn’t have grown at all in 2018. This situation is a cause for concern when the economy is growing, and it could be worse if the country enters a recession.

Trump is “a $100 billion man”

Gundlach also mentioned that President Donald Trump ran his election on the promise of reducing the national debt, but it’s risen by ~$1.5 trillion per year—also in a growing economy (DIA). The increase in trade deficits alone over the past two years has been ~$100 billion. In this context, he called President Trump “a $100 billion man.”

President Trump has imposed tariffs on billions of dollars worth of Chinese goods in a bid to improve the trade balance situation, but it hasn’t worked much in his favor. He went ahead with the tariffs despite opposition from companies such as Apple (AAPL), Facebook (FB), Amazon (AMZN), Alphabet (GOOG), and Walmart (WMT), which are facing increasing hardship and losses due to these tariffs and retaliatory tariffs from other countries.

Latest articles

Today, Canopy Growth announced that it acquired the Saskatchewan-based KeyLeaf Life Sciences along with entities relating to the company and its intellectual property. Here's what you need to know about the completed deal.

Yesterday, Tyson Foods (TSN) and fellow meat producers Pilgrim’s Pride (PPC) and Sanderson Farms (SAFM) took a hit to their stocks after news came out about an investigation over price-fixing allegations.

On June 24, RH (RH) was trading at $115.01, implying a rise of 21.2% since its announcement of its first-quarter earnings results on June 12. Despite the surge in its stock price, the company is still trading at a discount of 29.1% to its 52-week high.

26 Jun

Roku Stock Fell Close to 7.0% Yesterday

WRITTEN BY Aditya Raghunath

Roku stock fell 6.8% yesterday to close trading at $93.25 per share. Roku stock has lost over 9.0% in market value in the last two trading days. Prior to this pullback, Roku stock was up a whopping 235.0% year-to-date.

26 Jun

Beyond Meat Stock Up Today on New Product Launch

WRITTEN BY Rajiv Nanjapla

Today, Beyond Meat (BYND) announced that its new product, Beyond Beef, will hit markets across the US later this week.

FedEx (FDX) ended fiscal 2019 on a dismal note and reported a significant YoY decline in fourth-quarter earnings. The delivery giant posted adjusted EPS of $5.01, which was 15.2% lower than the year-ago quarter’s earnings of $5.91. The company cited sluggish revenue growth and increased expenses as the main reason behind the dismal bottom-line performance.