Jeff Gundlach told CNBC the Fed should have hiked rates by half a percentage point instead of a quarter. He said this after the fact. After the hike already happened. After everyone already knew what inflation did.
This is called hindsight. Some people call it analysis. Gundlach runs DoubleLine Capital, which means he manages other people's money while telling reporters what Jerome Powell did wrong six months too late. The bond king speaks and retail traders scramble to reverse positions they took based on what the last bond king said three weeks ago.
The Fed hiked by 25 basis points. Gundlach wanted 50. The difference between these two numbers is one quarter of one percent. That's the gap between genius and catastrophe apparently. If you're keeping score at home, both numbers involve raising rates, which means Gundlach agrees with the Fed's direction but wants credit for being more aggressive about it.
Picture Powell watching CNBC in his office. He sees Gundlach explain how the quarter-point hike was weak. Powell nods slowly. He writes himself a note: "Next time call Jeff first." He underlines it twice. Then he raises rates again and Gundlach goes back on television to explain that was also wrong.
The beautiful thing about being Jeff Gundlach is you can always be right. Hike too little, you were too dovish. Hike too much, you broke something. Hike exactly the amount Gundlach suggested six months from now and he'll tell everyone the timing was off. Meanwhile your portfolio is getting obliterated because you bought long-dated Treasuries after watching a different billionaire on a different network last Thursday.
Gundlach made his call. The Fed made theirs. One of them controls monetary policy for the largest economy on earth. The other one gets to be right on television.
Photo by Joshua Hoehne on Unsplash
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