{"id":6020,"date":"2023-11-02T12:34:43","date_gmt":"2023-11-02T12:34:43","guid":{"rendered":"https:\/\/connectwithfund.com\/markets\/jeff-gundlach-says-massive-interest-expense-problem-could-cause-the-next-u-s-financial-crisis\/"},"modified":"2023-11-02T12:34:44","modified_gmt":"2023-11-02T12:34:44","slug":"jeff-gundlach-says-massive-interest-expense-problem-could-cause-the-next-u-s-financial-crisis","status":"publish","type":"post","link":"https:\/\/connectwithfund.com\/?p=6020","title":{"rendered":"Jeff Gundlach says \u2018massive interest-expense problem\u2019 could cause the next U.S. financial crisis"},"content":{"rendered":"
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\n \u201c<\/span>\u2018We have a massive interest expense problem. A massive interest expense problem, in this country, that is going to be, I believe\u2026the next financial crisis. And so that\u2019s what I\u2019m more focused on.\u00a0\u2018\u201d<\/span>\n <\/p>\n


\n \u2014 Jeff Gundlach, CEO of DoubleLine<\/span>
\n <\/small><\/p><\/div>\n<\/p><\/div>\n

That\u2019s Jeff Gundlach, chief investment officer and founder of DoubleLine Capital, sounding caution on what he thinks could be the next financial crisis for the market. <\/p>\n

The money manager doesn\u2019t see the crisis playing out as a result of arcane financial securities, but rather, simpler ones: Treasury bonds and short-term T-bills. <\/p>\n

\n

The CEO and CIO, speaking Wednesday on CNBC\u2019s \u201cClosing Bell,\u201d said the mounting federal deficit \u2014 which stood at $1.7 trillion, up $320 billion, or 23%, from a year ago as of Sept. 30, according to the Treasury Department \u2014 could eventually overwhelm the government\u2019s ability to service its debts. <\/p>\n

That deficit marks the third-highest on record, after fiscal years 2020 and 2021.<\/p>\n

Gundlach\u2019s comments came on the heels of the Federal Reserve\u2019s closely watched decision to keep interest-rates steady at a range of 5.25% to 5.50%, as the central bank assesses its next steps in its mandate of squelching inflation. <\/p>\n

Servicing the country\u2019s debt has become increasingly expensive as Jerome Powell\u2019s Fed has attempted to cool the economy by raising key interest rates over a relatively rapid period, from at or near 0% to more than 5%.<\/p>\n

This year, some $659 billion was directed to pay interest on accumulated debt, up from $475 billion in 2022 and $352 billion in 2021, according to Treasury Department data.<\/p>\n

\u201cWe can\u2019t afford this government that we\u2019re running at today\u2019s interest-rate level, \u201d Gundlach told CNBC. <\/p>\n

Gundlach\u2019s concerns also appear to be front of mind for Powell and Co. <\/p>\n

Speaking at the Economic Club of New York last month, the Fed chairman said U.S. debt levels could, indeed, become a problem going forward. \u201cThe path we\u2019re on is unsustainable, and we\u2019ll have to get off that path sooner rather than later,\u201d he said.<\/p>\n

As for stocks, Gundlach appeared to be more sanguine about equities even as he appeared to see the strong possibility that a recession was in the offing, considering the impact of all the Fed\u2019s hard-charging monetary policy on business and jobs. <\/p>\n

\u201cI really believe that layoffs are coming,\u201d Gundlach said. <\/p>\n

Wednesday\u2019s trading action saw the Dow Jones Industrial Average
\n DJIA
\n \u00a0end up 222 points, or 0.7%, while the S&P 500
\n SPX
\n rose by about 44 points, or 1.1%, to 4,237.86, and the Nasdaq Composite Index
\n COMP
\n \u00a0rose 210 points, or 1.6%, to 13,061.47 in its fourth straight day of gains.<\/p>\n

Meanwhile, the 2-year Treasury
\n BX:TMUBMUSD02Y
\n closed at its lowest level since Sept. 7, while the 10-year Treasury note
\n BX:TMUBMUSD10Y
\n touched its lowest level since Oct. 16. <\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

\u201c\u2018We have a massive interest expense problem. A massive interest expense problem, in this country, that is going to be, I believe\u2026the next financial crisis. And so that\u2019s what I\u2019m more focused on.\u00a0\u2018\u201d \u2014 Jeff Gundlach, CEO of DoubleLine That\u2019s Jeff Gundlach, chief investment officer and founder of DoubleLine Capital, sounding caution on what he thinks could be the next financial crisis for the market. The money manager doesn\u2019t see the crisis playing out as a result of arcane financial securities, but rather, simpler ones: Treasury bonds and short-term T-bills. The CEO and CIO, speaking Wednesday on CNBC\u2019s \u201cClosing Bell,\u201d<\/p>\n","protected":false},"author":1,"featured_media":6021,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[],"class_list":["post-6020","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets"],"yoast_head":"\nJeff Gundlach says \u2018massive interest-expense problem\u2019 could cause the next U.S. financial crisis | ConnectWithFund<\/title>\n<meta name=\"description\" content=\"\u201c\u2018We have a massive interest expense problem. 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