Wall Street’s Bond King Calls US Central Bank the “Zombie Fed”

Wall Street’s “bond king” said investors have lost faith in central banks, and called the Federal Reserve the “Zombie Fed.”

Jeffrey Gundlach made the comments in an interview with Reuters after safe-haven German Bund yields fell below zero on for the first time and global equity markets continued a precipitous slide:

Central banks are losing control and they don’t know what to do … just like the Republican establishment and Donald Trump.”

CNBC reported German 10-year sovereign bonds going negative for the first time ever on Tuesday:

At around 8.30 a.m. London time, the yield hit zero and briefly fell into negative territory as investors continued to flock to safe-haven assets. Bond prices and yields move in opposite directions and a negative yield implies that investors are effectively paying the German government for the privilege of parking their cash. By the end of the European trading day, the yield was still just in negative territory at negative 0.0020%.”

What is Gundlach’s advice?

He’s come to the same conclusion as many of the world’s biggest investors. It’s time to buy gold and safe-haven assets.

Negative bong yields is just one reason to buy gold. Download SchiffGold’s Free White Paper: Why Buy Gold Now?

Gundlach oversees more than $100 billion at Los Angeles-based DoubleLine. His remarks came as the Federal Reserve was in the midst of its June FMOC meeting. Just a few weeks ago, it was a foregone conclusion that the Fed would raise interest rates this month. But after a shockingly bad May jobs report, it suddenly became a foregone conclusion the Federal Reserve would not raise rates. In his recent podcast, Peter Schiff predicted the meeting would be a dud.

Gundlach said the central bankers have no idea what they’re doing.

The Fed is confused and their confusion spills into investor psychology…The Fed changes its tone so frequently, it seems every other week the message is different. They’ve turned into the ‘Zombie Fed.’ They say the meeting this week is ‘live,’ but investors all know it isn’t at all.”

Gundlach also blasted negative interest rates, saying “they don’t do what they are theoretically supposed to do,” and they “aren’t leading to higher economic growth.” He said world gross domestic product may well average just 1%, even against the backdrop of aggressive global monetary policies. He noted the precipitous fall of several stock markets. Germany’s has tumbled 22%, Japan’s is down 23%, the UK market has dropped 15%, and the French stock market has fallen 20%. “Negative rates do not prop up stock markets,” Gundlach said.

But negative interest rates are good for gold.

With no end in sight to the confused central bank policoes, Gundlach doesn’t expect things to get better any time soon.

This summer is going to be a rocky ride.”

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