Here's what L.A.'s celebrated bond fund manager tells Barron's:
"Look, I have a gift, or some would say a curse, of being able to have stunning insight into the reality of markets and the economy," Gundlach says, dressed resplendently at this particular moment in a well-tailored Italian suit with matching green tie and pocket square. "I don't often know where my ideas come from. Maybe it's the fact that I'm obsessively regimented in my analysis, borderline autistic. But whether it's bond selection or asset allocation, we can do it better than just about anybody around."
Turns out that Gundlach's track record is pretty amazing - so much so that you can't help but pay attention when he says that the S&P 500, now at 1317, will fall to 500 in the next couple of years, and that the municipal bond market is on its way to a big fall.
"Look, I don't know whether the market will suffer $10 billion or $30 billion in defaults, but the actual amount doesn't matter, Gundlach says. "There will be a panic at the margin, and muni bonds from the highest-rated on down will plummet, in part because other sorts of investors tend not to step in."