It’s mid-October, and Jeffrey Gundlach is giving a stump speech to a luncheon crowd of about 200 financial advisers and investors at Los Angeles’s City Club. The renowned money manager’s theme: the financial catastrophe on the horizon.
Investors cut bullish commodity bets to the lowest in almost six months as U.S. budget talks stalled, increasing concern that lawmakers’ failure to reach an agreement with push the world’s biggest economy back into a recession.
Top-tier junk bonds produced safer returns than debt from the most creditworthy borrowers and the U.S. government over the past five years, a period that included the bankruptcy of Lehman Brothers Holdings Inc. and the biggest bond market swings on record.
Speculators decreased wagers on rising commodity prices to the lowest since July 2009 amid concern that Europe’s inability to contain its debt crisis will crimp demand for raw materials as global growth slows.