GUNDLACH STARTING TO LOSE HIS MIND OVER LOOMING FED

I’ve been following the bond king very closely and I find that he looks like the gent who played Hannibal Lecter from the teevee, Mads Mikkelsen. A few days from the first Fed hike in a decade, Hannibal Gundlach is beginning to sound a bit crazy.

I’d have to believe that if they met today that they wouldn’t raise rates,” Gundlach told Reuters in a telephone interview. “I mean, Wow. Look at the chart of JNK (The SPDR® Barclays High Yield Bond ETF). It’s accelerating to the downside.”
Thursday, Martin Whitman’s Third Avenue Management said it was barring investor withdrawals while it liquidated its high-yield bond fund, an unusual move that highlights the dangers of loading up on risky assets that are hard to trade even in good times.
“There’s never just one cockroach” in any kind of credit meltdown, said Gundlach, who oversees $80 billion at the Los Angeles-based DoubleLine Capital. Investors have been on “credit overload,” in a reach for yield, Gundlach said. “People are too long credit and the credit is melting down and the stock market is whistling through the graveyard. It is so similar to 2007, it’s scary.”
The junk-bond fund blowup comes ahead of next week’s Federal Reserve’s Open Market Committee meeting on December 15 and 16, at which time policy makers are expected to raise rates from near-zero levels for the first time in nearly a decade.
Gundlach, who has been warning that the U.S. Federal Reserve should not tighten monetary policy next week, said: “They’re just hell-bent on raising rates. They talked that they would do it and they want to do it — and yet nominal GDP is lower than it was in September of 2012.”
“Yet they did QE3 in September 2012,” Gundlach said.
Gundlach said investors should note that the PCE deflator is currently lower than it was in September of 2012; junk bonds are massively weaker, as are emerging Markets and the CRB index.
“How is it that QE3 was necessary with all of those indicators substantially stronger than they are today and yet we are going to raise rates now ‘because we promised’.”

He makes excellent points. But he’s making one fatal error, when trying to understand this Fed: it’s Bernanke less. He was an American hero, a monetary legend. Yellen is a grandmother with a string of pearls to attend to. Ben used to keep the asshole from Kansas in check, slap fire out of his mouth when he needed to. Yellen is permitting the hawks to rule the roost–because she’s old, weak, and feeble minded.

Ergo, this Fed will raise rates into year over year earnings decline, the first time since 1967, pushing us over the ledge into recession.