New Bond King Gundlach Predicts 8% Dollar Decline, Favors Emerging Markets

Jeffrey Gundlach, the renowned investor known as the "New Bond King," has made a significant prediction regarding the future of the U.S. dollar and global stock markets. Gundlach advises investors to sell U.S. stocks and embrace international markets, as he believes the dollar has entered a long-term downward trend. He is particularly optimistic about the performance of emerging markets, with a focus on India.

Gundlach, who manages DoubleLine Capital, a firm with approximately 950 billion in assets under management as of the end of 2024, has stated that the dollar is at the beginning of a long-term bear market. He anticipates that the dollar will weaken against other currencies, making international stocks, particularly those in emerging markets, more attractive. Gundlach's prediction aligns with his view that the Federal Reserve will maintain interest rates unchanged in the near future, which could further impact the dollar's value.

Gundlach's outlook on the dollar's long-term decline suggests that investors should consider diversifying their portfolios by including more international stocks. His advice comes at a time when many investors are reassessing their strategies in light of global economic uncertainties. His prediction that the dollar will continue to weaken against other currencies underscores the importance of considering international investments, especially in emerging markets like India.

Gundlach's views are based on his extensive experience in the financial markets and his track record of accurate predictions. His advice to investors to move away from U.S. stocks and towards international markets is a significant shift in strategy, one that could have far-reaching implications for global investment trends. As the dollar's value continues to fluctuate, investors will be closely watching Gundlach's predictions and adjusting their portfolios accordingly.

Gundlach's strategy of not holding U.S. stocks but instead holding stocks from other regions is seen as effective. The ICE U.S. Dollar Index has already declined by about 8% this year, reflecting a loss of confidence in U.S. assets due to aggressive trade policies. This has led to a reassessment of the dollar's dominant role in global commerce. Gundlach believes that investors denominated in dollars who purchase foreign stocks can benefit from a "double win" scenario: a weakening dollar against foreign currencies and better performance of international stocks compared to U.S. stocks.

Gundlach has a clear preference for certain markets. He believes it is reasonable to invest in several emerging market countries, with India being his long-term favorite. However, he also sees potential in certain Southeast Asian countries, as well as Mexico and Latin America. Additionally, Gundlach points out another potential market shift. Due to escalating geopolitical tensions, foreign investors in the U.S. may hesitate to make further investments, which could create another favorable factor for international markets. If this situation reverses, it could lead to significant selling, further supporting Gundlach's argument for holding stocks outside the U.S.

In terms of monetary policy, Gundlach predicts that the Federal Reserve will keep interest rates unchanged at its upcoming policy meeting, despite the current relatively low inflation rate. He estimates that inflation could reach around 3% by the end of 2025 but acknowledges the difficulty in predicting future price pressures due to the lack of clarity in Trump's tariff policies.