By Barbara Kollmeyer, MarketWatch
While the commander-in-chief doesn’t always get what he wants these days, asking for a stock market rally may be less of a stretch than it was in the dark days around Christmas.
Amid the drag of a border-wall stalemate and government shutdown, reports have emerged that POTUS wants to get a China trade deal done to light a match under Wall Street, and help it get over that December slump. Positive chatter out of Beijing as a surprise third day of talks came to a close is not hurting at all.
Of course, the greenest of investors have hopefully learned by now that markets can turn on a dime and pull the rug right out from under them.
And love him or hate him, DoubleLine Capital founder Jeff Gundlach has warned that the market downturn could be a prolonged one. He’s back with more advice for investors, earning a spot in our call of the day .
After a major meltdown in December, junk bonds have been having a revival of sorts lately, but Gundlach told investors Tuesday to use those gains “as a gift and get out of them.”
Instead, he suggests looking for companies with strong balance sheets. “That’s going to be the way to survive the zigzags in 2019,” said Gundlach , in his annual “Just Markets” webcast Tuesday. And while some say investors may be looking for signs of recession that aren’t there, he said junk-bond spreads are among those “flashing yellow” on that front.
Gundlach also tossed some shade at Fed Chairman Jerome Powell’s rally-inspiring comments last Friday, as he said the central bank chief “went from pragmatic Powell to Powell put and the markets have been throwing a party since then.” He added that the way investors have been piling into the market lately looks similar to what was going in the credit market before the last big financial crisis.
Other snippets of advice included a call to invest in emerging market stocks over the S&P, especially if the dollar weakens; avoid the value trap in Europe; and for the brave, bitcoin could crawl back to $5,000.
One more thing, Gundlach thinks U.S. national debt is “horrific,” describing it as akin to every U.S. household maxing out three credit cards with $5,000 limits.
The Dow /zigman2/quotes/210598065/realtime DJIA +1.76% , S&P 500 /zigman2/quotes/210599714/realtime SPX +2.47% and Nasdaq /zigman2/quotes/210598365/realtime COMP +3.33% /zigman2/quotes/210598365/realtime COMP +3.33% are all moving higher in early action.
The dollar /zigman2/quotes/210598269/delayed DXY -0.19% and gold are softer, but crude is soaring.
Europe stocks /zigman2/quotes/210599654/delayed XX:SXXP +1.42% are up, while continued optimism over trade talks triggered a rally for Asia, with the Hang Seng /zigman2/quotes/210598030/delayed HK:HSI +2.89% up over 2%.
Fitch has warned that the U.S. could lose its triple-A sovereign credit rating this year if government dysfunction raises fears about a breach of the debt limit toward March. As for the shutdown, furloughed federal workers owe an estimated $438 million in rent and mortgage payments for January, says Zillow. But funding for food stamps will continue. Meanwhile, a new poll finds most Americans blaming Trump for the stalemate .