gundlach prez 2013

7/30/2019 gundlach prez 2013

1/72

2013MarketOutlook

YearoftheSnake

LiveWebcasthostedby:

JeffreyGundlach

ChiefExecutiveOfficer

January8,2013


2/72

Announcements

WebcastNews

PhilipBarach January22,2013

LowDuration BuildingPortfolioHorizons

1:15pm

PDT/4:15

pm

EDT

EmergingMarkets

1:15pmPDT/4:15pmEDT

,TotalReturn&Core

1:15pmPDT/4:15pmEDT

ToReceivePresentationSlides:

Youcanemail

.

1


3/72

TABIoo ess er cto t e ar et


4/72

BofA/MerrillFixedIncomeIndexReturns

Grey=Year2011

Blue=Year2012

13.63%

4.50%

3.75%

HighYield(JOAO)

Convertibles(VOSO)

18.30%

.

7.51%

8.16%InternationalEmerging(IGOV)

3.28%

9.52%

5.60%InternationalDeveloped(NOGO)

orpora e

2.19%

2.59%

9.19%

.

Government(G0A0)

Mortgages(MOAO)

3DataSource:BofA/MerrillLynchIndicesthroughyearendDecember31,2011andDecember31,2012fortherespectiveyearsindicated.PleaseseetheAppendixforindexdefinitions.Aninvestmentcannotbemadedirectlyinanindex.


5/72

BofA/MerrillFixedIncomeIndexReturns

1.33%

rey=

ear

Blue=Year2012

14.36%

19.70%

6.12%BBRatedHighYieldCredit(JOA1)

15.03%

8.12%

4.72%

BRatedHighYield(JOA2)

9.82%

11.98%

7.39%ARatedCredit(COA3)

3.97%9.11%AAARatedCredit(COA1)

InvestmentGrade=IndicesratedAAAtoBBB (shownabove)areconsideredtobeinvestmentgrade. AbondisconsideredinvestmentgradeifitscreditratingisBBB or

4

ig er yStan ar Poor sorBaa3 yMoo y s.T e ig ert erating,t emore i e y t e on istopay ac atpar 100cents ont e o ar.AAAisconsi ere t e ig est

qualityand thelowestdegreeofrisk.Theyareconsideredtobestableanddependable.

BelowInvestmentGrade=Alsoknownasjunkbond(shownabove)isasecurityratedbelowinvestmentgradehavingaratingofBBB orbelow.Thesebondsareseenas

havinghigherdefaultriskorotheradversecreditevents,buttypicallypayhigheryieldsthanbetterqualitybondsinorder to makethemattractive.Theyarelesslikelytopay

backatpar/$100centsonthedollar.

Source:BofA/MerrillLynchIndices asofyearendDecember31,2011andDecember31,2012fortheirrespectiveyearsindicated.

Aninvestmentcannotbemadedirectlyinanindex.


6/72

MerrillInternationalFixedIncomeIndexReturnsAsofDecember31,2012

Latest1Year Bestperformer:Russia(GDRU)

WorstPerformer:Japan(G0Y0)

9.45%Japan(G0Y0)

7.53%

.

UnitedKingdom(G0L0)

11.90%

10.64%

France(G0F0)

Mexico(GDMX)

18.61%

12.23%

Russia(GDRU)

Brazil(GDBR)

DataSource:MerrillLynch

15% 10% 5% 0% 5% 10% 15% 20% 25%

5


7/72

U.S.Bond,Currency,andCommodityPerformance

2012TotalReturn

18.91%20.00%

USBond,Currency,andCommodityPerformance1

(2012TotalReturn)

4.18% 4.23%

5.99%

9.66%10.00%

2.48%

0.51%

1.79%

3.37%

0.00%

11.31% 11.48%

20.00%

10.00%

25.43%22.99%

30.00%UST10yr UST30yr DXY EURUSD JPYUSD Copper Gold CrudeOil NatGas Wheat Corn CRBIndex VIX

2 3 4 4 4 4 44

Source:Bloomberg;DoubleLine

Notes:(1)

Returns

for

the

year

2012

ending

December

31,

2012

;(2)

Based

on

BofA

Merrill

Lynch

Current

10yr

UST

Index;(3)BasedonBofAMerrillLynchCurrent30yrUSTIndex;(4)BasedonS&PGSCISingleNameCommodity

ExcessReturnIndices

6


8/72

GlobalEquityPerformance

2012PriceReturn

29.06%30.00%

GlobalEquityPerformance(2012PriceReturn)

Yen 11.31%

Euro 1.79%

DXY 0.51%

22.91% 22.94%

25.70%

25.00%

13.41%

15.91%14.63% 15.23%

.

13.46%15.00%

.

7.26%5.84%

7.40%

3.17%

.

5.00%

10.00%

0.00%

Source:Bloomberg;

DoubleLine

Returnsfortheyear2012endingDecember31,2012.

7


9/72

NetWorthinHousingvs.EquitiesAsofDecember31,2010

Source:OrganizationforEconomicCooperationandDevelopment(OECD),GoldmanSachsEquityResearchThebestofFortnightThoughts,December13,

2012 8


10/72

NetWorthinFinancialAssetsbyCountryAsofDecember31,2012

9Source:Organization

for

Economic

Cooperation

and

Development

(OECD),

Goldman

Sachs

Equity

Research

The

best

of

Fortnight

Thoughts,

December

13,

2012


11/72

TABIIo a conomy


12/72

EuropeanCrisis:SovereignBondYields

Source:JP

Morgan,

FactSet,

ECB

DataisasofDecember31,2012.11


13/72

PIIGSGDPDecember31,1997EndingSeptember30,2012

12

Source:EuroStat

PIIGS=Portugal,Italy,Ireland,GreeceandSpain.

GDP=Refers

to

the

gross

Domestic

Product

or

market

value

of

all

final

goods

and

services

produced

within

acountry

in

agiven

period.


14/72

EuroZoneUnemploymentDecember31,1998throughSeptember30,2012

13

Source:Eurostat

Eurozoneincludes27memberstates:Austria,Belgium,Bulgaria,Cyprus,CzechRepublic,Denmark,Estonia,Finland,France,Germany,Greece,Hungary,

Ireland,Italy,

Latvia,

Lithuania,

Luxembourg,

Malta,

Netherlands,

Poland,

Portugal,

Romania,

Slovakia,

Slovenia,

Spain,

Sweden

and

the

United

Kingdom.


15/72

EuroZoneUnemploymentJanuary31,1994throughOctober31,2012andDecember31,2013

14

Eurozoneincludes27memberstates:Austria,Belgium,Bulgaria,Cyprus,CzechRepublic,Denmark,Estonia,Finland,France,Germany,Greece,Hungary,

Ireland,Italy,

Latvia,

Lithuania,

Luxembourg,

Malta,

Netherlands,

Poland,

Portugal,

Romania,

Slovakia,

Slovenia,

Spain,

Sweden

and

the

United

Kingdom.

Source:BiancoResearch


16/72

WheretoBeBornIndex Rankingsasof1988

15Source:TheEconomistIntelligenceUnithttp://media.economist.com/sites/default/files/images/2012/11/blogs/graphicdetail/where_to_be_born_in_1988.jpg


17/72

WheretoBeBornIndex Rankingsasof2013

16

http://www.economist.com/blogs/graphicdetail/2013/01/dailychart


18/72

U.S.Surplus/DeficitAsAPercentageofGNP/GDPDecember31,1790throughDecember31,2011

Source:http://www.ritholtz.com/blog/wp

content/uploads/2012/12/surplus

deficit

gnp.png

GrossNationalProduct(GNP)orGrossDomesticProduct(GDP)=ReferstothegrossDomesticProductormarketvalueofallfinal goodsandservicesproduced

withinacountryinagivenperiod.

17


19/72

JobLossesinLast11Recessions

Source:CalculatedRiskthroughOctober28,2012.18

http://www.calculatedriskblog.com/2013/01/decemberemploymentreport155000jobs.html


20/72

CapitalGainsIncomeDecember31,1914throughDecember31,2010

Source:Bianco

Research,

LLC,

Week

of

January

2,

2013

19


21/72

2013S&PRevenueEstimatesMarch3,2011throughJanuary1,2013

20Source:Bianco

Research,

LLC,

Week

of

January

2,

2013


22/72

FiscalCliffQuote

StartingDowntheFiscalCliff

FavoriteQuote:Regrettably,itsdistinctlypossiblethatwe

ave esame ypeo uncer a n y as e ugus e

limitdebate]upuntilthe11th hour,59th minute.

JuddGregg,

Former

US

Senator

21


23/72

FiscalCliff WhatWas/WasNotIncludedAsofJanuary1,2013

22Source:NYTimes http://www.nytimes.com/interactive/2013/01/01/us/themcconnellbidenplan.html?ref=politics


24/72

ImpactoftheTaxDealAsofJanuary1,2013

HowthedealpassedbyCongressonTuesdayisestimatedtochangetaxesateachincomelevel,on

topoftheeffectsoftheexpiringpayrolltaxcutandnewtaxesfromthehealthcarelaw.

AverageIncome Average TaxChangein2013 Changein

BeforeTaxes Federal Payrolltaxincrease AfterTax

TaxBurden Impactof andnewhealthcare Income

Top0.1% $7,985,826 $2,720,367 +$322,528 +$121,382 +$443,910 8.4%

Top1% $1,671,536 $542,927 +$50,508 +$23,125 +$73,633 6.5%Top20% 244,576 63,256 + 2,483 + 3,091 + 5,574 3.1%

Fourth20% $84,355 $14,891 $2 +$1,149 +$1,147 1.7%

Middle20% $52,294 $7,457 +$0 +$679 +$679 1.5%

Second20% $30,031 $2,483 +$1 +$366 +$367 1.3%

Bottom20% $11,290 $99 +$0 +$120 +$120 1.1%

23Source:DoubleLine;NYTimes http://www.nytimes.com/interactive/2013/01/01/us/politics/impactofthetaxdeal.html?ref=politics


25/72

TotalFederalRevenuesAsofJanuary1,2013

24http://www.ritholtz.com/blog/2013/01/detailsof

the

new

fiscal

deal/,

http://www.nytimes.com/interactive/2013/01/01/us/politics/impactofthetaxdeal.html


26/72

EstimateofBudgetaryEffectsoftheAmerican

TaxpayerReliefActof2012As

of

January

1,

2013

100

100/Spending

200

ChangeinRevenu

($Bn)

400

dgetaryEffectsof

500

B

DirectSpendingChg

25

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source:CongressionalBudgetOffice(CBO)http://www.cbo.gov/sites/default/files/cbofiles/attachments/American%20Taxpayer%20Relief%20Act.pdf


27/72

PossibleImpactofFiscalPolicyonGDPGrowthDecember31,2011throughDecember31,2013Estimates

EffectonGDPgrowthfromFederal,StateandLocalfiscalpolicy:

26Source:GoldmanSachsGlobalEconomics,CommoditiesandStrategyResearchPublishedJanuary2,2013


28/72

ObligatoryDebtCeilingChartDecember10,2010throughJanuary4,2013

27Source:Bianco

Research,

LLC,

Week

of

January

2,

2013


29/72

Q1/Q2GDPForecastsTrendingDown

28Source:Bianco

Research,

LLC,

Week

of

January

2,

2013


30/72

WhatContributedtotheFiscalCliff?

29http://online.wsj.com/article/SB10001424127887324677204578185451218436548.html

Source:Wall

Street

journal

How

Big

Deficits

Became

the

Norm,

December

18,

2012


31/72

U.S.DollarIndexSpotYearEnd2007throughJanuary8,2013

Source:BloombergFinancialServices,DoubleLineCapitalLP

DXY=DXY

is

the

US

Dollar

Index

(USDX)

indicates

the

general

value

of

the

US

dollar.

Average

exchange

rates

between

the

US

dollar

and

six

major

world

currencies.

Aninvestmentcannotbemadedirectlyinanindex.30


32/72

GlobalCurrencySpotPriceRankingsFortheYear2012

Source:Bloomberg

Financial

Services,

DoubleLine

Capital

LP 31


33/72

JapaneseIndexvs.S&P500Growthof$1December31,1979throughDecember31,2012

32Source:BloombergFinancialServices,DoubleLineCapitalLP


34/72

JapaneseIndexvs.S&P500Growthof$1December31,1989throughDecember31,2012

33Source:BloombergFinancialServices,DoubleLineCapital LP


35/72

12MonthUSD/JPYvs.5yearUSD/JPY

AsofJanuary8,2013



34


36/72

GoldSpotIndexYearEnd2007throughJanuary8,2013

Source:

Bloomberg

Financial

Services,

DoubleLine

Capital

LPAninvestmentcannotbemadedirectlyinanindex. 35


37/72

CRBCommodityIndexYearEnd2007throughJanuary7,2013


Note:The

TR/J

CRB

Commodity

Excess

Return

Index

is

an

arithmetic

average

of

commodity

futures

prices

with

monthly

rebalancing.

Aninvestmentcannotbemadedirectlyinanindex.36


38/72

ShanghaiIndexYearEnd2007throughJanuary8,2013


Note:The

Shanghai

Stock

Exchange

Composite

is

acapitalization

weighted

index

tracking

daily

price

performance

of

all

A

and

B

shares

listed

on

the

Shanghai

Stock

Exchange.ThisindexwasdevelopedDecember19,1990withabasevalueof100.


37


39/72

EmergingMarketsETFvs.S&P500January9,2012throughJanuary8,2013


SPY=S&P

500.

EEM

=Emerging

Markets

ETF.

Aninvestmentcannotbemadedirectlyinanindex. 38


40/72

S&PIndexYearEnd2009throughJanuary8,2013


Note:S&P

500

index

is

abasket

of

500

stocks

that

are

considered

to

be

widely

held.

It

is

weighted

by

market

value

and

its

performance

is

thought

to

be

representative

ofthestockmarketasawhole.


39


41/72

GlobalEquitiesvs.USJanuary4,2012throughJanuary3,2013


ACWI

=

iShares

MSCI

ACWI

Index

fund

is

an

exchange

traded

fund

replicating

the

ACWI

US

Equity

index.

S&P

500

index

is

a

basket

of

500

stocks

that

are

considered

to

bewidelyheld.Itisweightedbymarketvalueanditsperformanceisthoughttoberepresentativeofthestockmarketasawhole.


40


42/72

S&P500IndexandShanghaiIndexDecember31,2008throughJanuary4,2013


S&P500indexisabasketof500stocksthatareconsideredtobewidelyheld.Itisweightedbymarketvalueanditsperformanceisthoughttoberepresentativeof

thestockmarketasawhole.

The

Shanghai

Stock

Exchange

Composite

is

a

capitalization

weighted

index

tracking

daily

price

performance

of

all

A

and

B

shares

listed

on

the

Shanghai

Stock

Exchange.ThisindexwasdevelopedDecember19,1990withabasevalueof100.


41


43/72

10YearUSTreasuryYieldYearEnd2007throughJanuary8,2013

42Source:BloombergFinancialServices

Pleaseseetheappendixfordefinition.

I G d I d Yi ld


44/72

InvestmentGradeIndexYieldsYearEnd2007throughJanuary8,2013

Source:BloombergFinancialServices,JPMorgan

JACIICYM=TheJPMorganInvestmentGradeCorporateIndex,YieldtoMaturity.Investmentgrademeansthatthesecurityisratedbyoneofthethreenationally

recognizedmajor

rating

agencies,

Moodys,

S&P

or

Fitch,

as

above

BBB. Please

see

slide

67

of

this

presentation

for

further

ratings

descriptions.


43

R l ti G th f M ill C t I d t


45/72

RelativeGrowthofMerrillCorporateIndexto

MerrillTreasuryIndex

1.40

1.20

.

ate ry

04

,2013)

1.10

tive

Growth

R

1,

1985

Janua

1.00Re

l

(Decem

ber

3

0.80

.

Trend 1SigmaRelativetoTrend 2SigmasRelativetoTrend Corporate/Treasury

DataSource:MerrillLynch(C0A0;G0Q0);Monthlydatawithmostrecentobservationappended.

44

Hi h Yi ld I d Yi ld


46/72

HighYieldIndexYieldsYearEnd1994throughJanuary7,2013

Source:BloombergFinancialServices,JPMorgan

PleaseseetheappendixfordefinitionofBofA/MerrillLynchHighYieldCashPayIndex(J0A0).

Aninvestment

cannot

be

made

directly

in

an

index.

45

l i h f ill i h i ld h d


47/72

RelativeGrowthofMerrillHighYieldCashPayIndexto

Merrill15+YearTreasuriesIndex

1.20

1.30

1.10

e 04

,2013)

0.90

.

ive

GrowthRa

1985

Januar

0.70

0.80Relat

(December31

0.60 Trend 1SigmaRelativetoTrend 2Sigmas RelativetoTrend HighYield/15+yr Treasury

.

DataSource:MerrillLynch(J0A0;G0Q0);Monthlydatawithmostrecentobservationappended.

46

R l ti G th f M ill M t I d t


48/72

RelativeGrowthofMerrillMortgageIndexto

MerrillTreasur Index

1.15

1.10

04,

201

3)

1.05

e

GrowthRat

19

85

Januar

1.00

Relati

December31,

0.95(

Trend 1SigmaRelativetoTrend 2SigmasRelativetoTrend Mortgage/Treasury

DataSource:MerrillLynch(M0A0;G0Q0);Monthlydatawithmostrecentobservationappended.

0.90

47

R l ti G th f M ill US M i i l I d t


49/72

RelativeGrowthofMerrillUSMunicipalIndexto

Merrill1015YearTreasur Index

1.05

1.10

1.00

04

,2013)

0.90

0.95

ve

Growth

Rat

19

96

January

0.80

0.85Re

lati

(Decem

ber

31

,

0.75

Trend 1SigmaRelativetoTrend 2SigmasRelativetoTrend Municipal/1015yr Treasury

DataSource:MerrillLynch(U0A0;G7O2);Monthlydatawithmostrecentobservationappended.

0.70

48

Relative Growth of Merrill Emerging Market Index to


50/72

RelativeGrowthofMerrillEmergingMarketIndexto

MerrillTreasur Index

3.50

2.50

.

04,

201

3)

2.00

e

GrowthRat

19

91

January

1.00

.

Relati

December31,

0.50

(

Trend 1SigmaRelativetoTrend 2SigmasRelativetoTrend EmergingMarket/Treasury

DataSource:MerrillLynch(IGOV;G0Q0);Monthlydatawithmostrecentobservationappended.

0.00

49

Age of Farmers US


51/72

AgeofFarmers,US

50Source:USDepartmentofAgriculture(USDA),GoldmanSachsThebestofFortnightThoughts,December13,2012

Corn Bushel Yield


52/72

CornBushelYield

51Source:

Bianco

Research

Corn Stocks Use Ratio


53/72

CornStocksUseRatio

52Source:BloombergFinancialServices


54/72

TABIIIHousingandMBSMarketTrends

Homeownership Rate


55/72

HomeownershipRate

54Source:BloombergFinancialServicesHomeownership

affordability

measured

quarterly

and

subject

to

aone

month

lag.


54

Mortgage Refinancing Index


56/72

MortgageRefinancingIndex

Source:BloombergFinancialServices

MortgageRefinancingIndexasmeasuredbythe MortgageBankersAssociation.Reflectsthenumberofapplicationsforrefinance.Notallapplicationsareaccepted.

Aninvestment

cannot

be

made

directly

in

an

index.

5555

30Year U.S. Mortgage Rates


57/72

30 YearU.S.MortgageRates

Source:BloombergFinancialServices,Bankrate.com

ILM3NAVG=The

Overnight

National

Average

of

the

U.S.

30

year

Treasury

interest

rate.

They

help

consumers

see

the

movement

of rates

day

to

day.

Subject

to

one

daylag.

5656

HomePriceIndexLevelsandYearOverYearChange


58/72

g

Source:BloombergFinancialServices,CaseShiller

57

57

S&P/CaseShillerHomePriceIndexiscomprisedofpricechangeswithinthefollowingsubsetof20metropolitanmarkets:10City IndexBoston,Chicago,Denver,LasVegas,Los

Angeles,Miami,NewYork,SanDiego,SanFranciscoandWashingtonDC.Inadditiontothe10CityIndexitincludes:Atlanta,Charlotte,Cleveland,Dallas,Detroit,Minneapolis,

Phoenix,Portland,Seattle,andTampa.

CoreLogicNationalHousingPriceIndex(HPI)=CoreLogicisaleadingproviderofinformationandanalytics.Thisindexcovers 6,208zipcodes,572statisticalareasand1,027

countieslocatedinall50statesandDistrictofColumbia.Itisanationalaverage.

Aninvestment

cannot

be

made

directly

in

an

index.

HomePricesinMajorUSMetropolitanAreas


59/72

58

ABXAAA071Index


60/72


TheABX071AAAIndexisabasketofhomeequity.Constitutedfromreferenceobligationsissuedby20issuersofresidentialmortgagebackedsecurities.

Aninvestment

cannot

be

made

directly

in

an

index.

59

NonAgencyRMBS60++DelinquencyRate


61/72

January31,2005through November30,2012

50%

60%

40.0%

40%

uencies

vember2012

24.1%

20%

30%

0++SeriousDelin

ry

2005throughN

Prime

AltA

11.3%

10%

Janua

Subprime

0%

SeriousDelinquenciesisdefinedbymortgagesthatare60++delinquencyratesdefinedasloans60 or90dayslateinmortgagepayments,oralreadyinforeclosureorREOstatus.

PrimedefinedasFICO>725andLTV725andLTV>=75

Subprime

defined

as

FICO

725andLTV725andLTV>=75

SubprimedefinedasFICO


63/72

January31,2005throughNovember30,2012

71.9%80%

90%

Prime

AltA

58.5%

60%

70%

mber201

2

Subprime

47.4%40%

50%

LossSeverity

0

05throughNove

10%

20%January

0%

62

SeriousDelinquenciesisdefinedbymortgagesthatare60++delinquencyratesdefinedasloans60 or90dayslateinmortgagepayments,oralreadyinforeclosureorREOstatus.

PrimedefinedasFICO>725andLTV725andLTV>=75

Subprime

defined

as

FICO

725andLTV725andLTV>=75

Subprime

defined

as

FICO

gundlach prez 2013

Documents

Transcript of gundlach prez 2013