Jeffrey Gundlach's 9 Market and Economic Predictions for Investors, Advisors

5. Almost all signs point to recession.

Gundlach pointed to several economic indicators that suggest a U.S. recession in coming weeks or months.

The U.S. unemployment rate — “the last man standing in terms of parts of the economy, this is what people that want to be bullish on the economy look to” – might cross its 12-month moving average in the next few months, he said. “It would be strong indication that we’re looking at the front edge of a recession.”

The Conference Board Leading Economic Indicator “certainly has the look of recession in it,” now at negative 4.5% year over year, Gundlach said. The six-month number annualized is even worse at negative 7.3%, he said.

“This is heading very sharply into recessionary territory,” Gundlach said. “Once you’ve gotten this negative year-over-year on the LEI, there is no scenario, historically, that a recession was avoided.”

He looked again to the bond market.

“Obviously the yield curve is screaming recession. Thanks to the Fed’s more aggressive actions in the second half of the year the 3-month to the 10-year became inverted,” he noted. The “very inverted” 2-year/10-year Treasury yield curve, Gundlach added, is “obviously a recession indicator.”

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