Market Overview

Here's Where Gundlach Has A Short Position In The S&P 500

Here's Where Gundlach Has A Short Position In The S&P 500

The likelihood of stocks retesting their March lows is not only "very plausible," but the market is likely to "take out the low," DoubleLine CEO Jeffrey Gundlach said Monday on CNBC's "Halftime Report."

Pandemic Creates 'Social Unease'

People fail to understand the potential for "social unease" that will happen when at least 26 million Americans lost their job due to the coronavirus, Gundlach said. To put in in perspective, for every job that was created since 2009, one job has now been lost due to the pandemic, he said. 

Gundlach's S&P 500 Short 

Gundlach is putting his money where his mouth is and said he put a short on the S&P 500 index at 2,863. The risk-to-reward profile is "very poor" at these levels, as it is possible for the index to rise to 3,000, but the downside potential is much more, he said. 

Separately, Gundlach said the iShares IBoxx $ Invest Grade Corp Bd Fd (NYSE: LQD) looks "to be about the most overvalued asset in the bond market." The "LQD" ETF has rallied more than 20% since hitting a low on March 19.

"I would caution investors to be wary of panaceas like this," he said. "Many people don't understand the wide-ranging ramifications of the societal shift that's going on."

Gundlach On What's Next For The Market 

Looking forward, the downside potential for stocks is "easily to the lows or beyond," Gundlach said. But his short position isn't as large as what it was in February, he said, when he was " was very, very short."

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